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• Report  of 

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Curb  am  Wat er  Com  any , Durham , 

Jan.  1,  1916. 

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Trinity  College  Library 

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Report  of 

Hazen,  Whipple  & Fuller 

ON 

Durham  Water  Company 

Durham,  North  Carolina 

With  Appraisal  of  its  Plant  as  of 
January  1,  1916 


> /-%*/  ¥7 


Report  of 

\ \ 

Hazen,  Whipple  & Fuller 

ON 

Durham  Water  Company 

Durham,  North  Carolina 


With  Appraisal  of  its  Plant  as  of 
January  1,  1916 

e/ 


Digitized  by  the  Internet  Archive 
in  2016  with  funding  from 
Duke  University  Libraries 


https://archive.org/details/reportofhazenwhi01haze 


Correspondence  Preceding  Report 


MBA 

)^)  Ce> 


[Letter] 

City  oe  Durham,  November  13th,  1915. 
Mr.  Charles  F.  Batchelder, 

Durham,  N.  C. 

Dear  Sir  : 

Upon  your  statement  that  you  are  representing  the  Durham  Water 
Company  and  Messrs.  E.  H.  Rollins  & Son,  of  Boston,  I am  directed 
by  the  Special  Committee  from  the  Board  of  Aldermen  of  the  City 
of  Durham  to  request  through  you  permission  of  the  Durham  Water 
Company  to  have  the  engineers  of  the  City  of  Durham  inspect  and  ap- 
praise the  Durham  Water  Company’s  plant  and  system,  and  to  have 
inspected  and,  if  necessary,  audited  the  books  of  the  Water  Company, 
both  here  and  in  Boston.  It  is,  of  course,  understood  that  the  City 
of  Durham  will  bear  the  cost  of  this  inspection  and  appraisement. 

This  request  is  made  because  the  Board  of  Aldermen  desires  to 
enter  into  a satisfactory  arrangement  for  the  purchase  of  the  proper- 
ties of  the  Durham  Water  Company,  and  therefore  desires  to  get  a 
fair  and  equitable  estimate  of  all  values  of  the  Water  Company  as  a 
basis  on  which  to  submit  a bid  for  its  purchase. 

If  we  are  granted  the  permission  to  make  the  inspection  and  ap- 
praisement as  requested,  it  is  our  intention  to  proceed  with  this  work 
as  soon  as  possible. 

Yours  truly, 

(Signed)  J.  L.  MOREHEAD, 

Approved:  City  Attorney. 

(Signed)  B.  S.  SKINNER,  Mayor. 


[Telegram] 

New  York,  November  15,  1915. 

B.  S.  Skinner,  Mayor,  and  J.  S.  L.  Morehead,  City  Attorney, 

Durham,  N.  C. 

Answering  your  letter  to  Batchelder,  November  thirteenth.  Water 
Company  glad  to  have  their  property  valued  and  books  opened  as 
follows : — Hoping  to  save  time,  avoid  all  possible  disagreements,  have 
some  finding  which  will  eliminate  all  criticism  and  command  confidence 
on  all  sides  Company  will  agree  this  investigation  shall  be  done  at 
once  by  your  representative  and  theirs  acting  jointly  in  conference. 


4 


Durham  Water  Company 


Company  will  select  Hazen,  Whipple  and  Fuller  as  high  grade,  inde- 
pendent, unprejudiced  representatives.  Wire  me  Boston  when  your 
engineer  will  be  ready  to  start  and  we  will  instruct  Hazen  to  act 
accordingly. 

JOHN  D.  HARDY. 


[Telegram] 

Durham,  N.  C.,  November  16,  1915. 

John  D.  Hardy, 

11  High  St.,  Boston. 

Your  wire,  November  fifteenth.  We  are  pleased  to  note  your  ex- 
pression of  willingness  to  allow  the  City  under  certain  conditions  to 
make  examination  of  your  property  and  books  in  order  to  secure  the 
necessary  information  on  which  to  base  a price  which  we  hope  will  be 
satisfactory  to  yourselves.  In  your  selecting  Hazen  would  you  expect 
the  City  to  pay  his  charges. 

J.  L.  MOREHEAD, 

City  Attorney. 


[Telegram] 

Boston,  November  17,  1915. 

/.  L-  Morehead,  City  Attorney, 

Durham,  N.  C . 

Your  wire  of  yesterday  received  today.  Thank  you.  We  expect  to 
pay  Hazen.  Will  instruct  him  to  go  to  Durham  on  receipt  your  wire. 

JOHN  D.  HARDY. 


[Telegram] 

Durham,  November  19,  1915. 

John  D.  Hardy, 

ii  High  St.,  Boston,  Mass. 

Your  wire  seventeenth.  Our  engineer  can  start  week  beginning 
November  twenty-ninth.  Our  understanding  is  that  this  inspection  is 
made  without  prejudice  to  either  party  and  while  it  is  made  by  engi- 
neers working  together  their  estimates  and  reports  may  be  made 
separately. 

J.  L.  MOREHEAD. 

City  Attorney. 


Durham  Water  Company 


5 


[Telegram] 

Boston,  November  20,  1915. 

/.  L.  Morehead,  City  Attorney, 

Durham,  N.  C. 

Am  asking  Hazen,  Whipple  and  Fuller  to  be  on  hand  November 
twenty-ninth.  My  understanding  same  as  yours  namely : inspection 
and  appraisement  are  made  without  prejudice  to  either  party  and  while 
they  are  made  by  engineers  working  together  their  estimates  and  reports 
may  be  made  separately.  I hope  they  will  agree  and  unite  in  one 
report. 

JOHN  D.  HARDY. 


INSTRUCTIONS  TO  HAZEN,  WHIPPLE  AND  FULLER 

Boston,  November  22,  1915. 

Messrs.  Hazen,  Whipple  and  Fuller, 

SO  East  42nd  Street, 

New  York  City. 

Gentlemen  : 

The  City  of  Durham,  North  Carolina,  through  its  officers  has  asked 
permission  to  value  the  property  of  the  Durham  Water  Company  and 
to  inspect  its  books.  It  asks  this  because  its  Board  of  Aldermen  de- 
sires to  enter  into  a satisfactory  arrangement  for  the  purchase  of  the 
properties  of  the  Company  and  therefore  desires  to  get  a fair  and  equi- 
table estimate  of  all  values  of  the  Water  Company  as  a basis  on  which 
to  submit  a bid  for  its  purchase. 

The  Company  has  been  glad  to  agree  that  this  investigation  be  made 
at  once  by  the  representative  of  the  City  and  the  representative  of  the 
Company,  acting  jointly  in  conference. 

It  is  agreed  between  City  and  Company  that  this  inspection  is  made 
without  prejudice  to  either  party,  and  while  it  is  made  by  engineers 
working  together  their  estimates  and  reports  may  be  made  separately. 
I hope  however  that  the  City’s  engineer  and  yourselves  may  agree  and 
join  in  one  report. 

Though  you  have  been  known  to  me  by  reputation  only,  because  that 
reputation  accords  to  you  high  character  and  efficiency  in  water  works 
matters  and  in  the  general  practice  of  your  profession,  in  anticipation 
of  the  agreement  just  concluded  with  the  City  and  to  save  time,  I 
already  have  asked  you  briefly  if  you  could  go  to  Durham  and  you 
have  said  you  would  if  you  should  be  called  on  to  do  so. 

The  City’s  representative  will  be  ready  to  start  on  this  appraise- 
ment in  the  week  beginning  Monday,  November  29th.  Will  you  please 
be  in  Durham  to  start  on  that  date  on  the  work  desired. 


6 


Durham  Water  Company 


The  Company  wishes  to  put  everything  it  has  without  reserve  at 
the  disposal  of  yourselves  and  the  City  representative.  Data  on  the 
physical  properties  of  the  Company  will  be  found  in  Durham  as  well 
as  all  of  its  books  of  accounts  except  the  treasurer’s  books  in  Boston. 
These  will  be  sent  to  Durham  whenever  they  are  wanted. 

I have  no  directions  to  give.  You  will  use  the  means  and  methods 
in  reaching  a just  and  fair  valuation  of  Company’s  property,  exclusive 
of  cash  balance  and  bills  and  accounts  receivable  and  payable,  which 
you  think  best  and  which  are  sanctioned  by  best  practice  in  similar 
cases. 

Col.  J.  C.  Michie,  the  superintendent  of  the  Company,  in  whose  in- 
tegrity you  may  put  absolute  confidence,  will  extend  to  you  all  the 
resources  of  his  office. 

Yours  very  truly, 

(Signed)  JOHN  D.  HARDY, 
Receiver,  Durham  Water  Company. 


Report  on  the  Value  of  the  Property  of  the 
Durham  Water  Company 
Durham,  N.  C. 


February  24,  1916. 

John  D.  Hardy,  Esq., 

Receiver,  Durham  Water  Co., 

Durham,  N.  C. 

Sir  : 

In  accordance  with  your  instructions,  we  have  examined  the  prop- 
erty of  the  Durham  Water  Company  and  made  an  estimate  of  its 
value.  In  our  judgment,  the  fair  value  of  the  property  as  of  January 
1,  1916,  is  $589,000. 

In  placing  this  value  on  the  property,  we  have  taken  into  consider- 
ation the  fact  that  the  city  of  Durham  has  started  the  construction 
of  works  for  a water  supply  on  Flat  River  and  that  the  company 
must  anticipate  competition  in  the  future.  If  the  company  were  to 
continue  its  business  in  the  future  as  it  has  in  the  past,  without  com- 
petition, charging  fair  and  reasonable  rates  for  water,  the  value  of  the 
plant  would  be  greater  than  the  sum  which  we  have  given  above.  We 
have  examined  the  income  and  operating  expenses  of  the  company; 
have  made  an  estimate  of  the  cost  of  the  improvements  and  extensions 
which  are  needed  to  put  the  plant  into  thoroughly  good  condition  ; 
and  find  that  the  prospective  net  earnings  of  the  company  in  the  future 
will  be  sufficient  to  render  a return  on  $589,000  which  will  be  larger 
than  the  rate  of  interest  usually  received  from  water  works  properties. 

We  recognize  the  fact  that  it  will  be  better  for  both  the  company 
and  the  city  to  avoid  competition,  and  believe  that  this  value  which 
we  have  given,  although  it  is  less  than  the  business  is  worth  under 
conditions  which  existed  before  the  city  decided  to  build  its  own  plant, 
represents  a fair  value  under  the  present  conditions.  This  value  is 
substantially  the  estimated  cost  of  reproduction  of  the  property,  less 
a fair  allowance  for  depreciation,  plus  the  cost  of  obtaining  the  busi- 
ness which  the  company  now  has  from  its  consumers  which  are  con- 
nected to  its  pipes,  and  the  value  of  the  unexpired  franchise^ 

Competition  in  supplying  water  to  a city  is  economically  wrong. 
It  results  invariably  in  waste  due  to  duplication  of  works  and  labor. 
It  results  ultimately  in  poorer  service  and  higher  rates  to  the  con- 
sumers than  would  otherwise  be  the  case.  In  every  instance  where 
competition  has  actually  taken  place  the  results  have  been  unfortunate 


8 


Durham  Water  Company 


for  all  parties  concerned.  Fortunately  there  are  but  few  such  cases, 
as  usually  those  who  have  been  in  control  of  water  companies  and 
municipalities  have  appreciated  the  situation,  and  private  works  have 
been  taken  over  by  the  municipalities  at  a value  arrived  at  through 
agreement  or  through  arbitration  or  condemnation  proceedings. 

Our  understanding  of  the  contention  of  the  City  of  Durham,  as 
indicated  to  us  by  Mr.  Gilbert  C.  White,  its  engineer,  during  our  con- 
ferences, is  that  the  city  having  decided  on  the  Flat  River  water  supply, 
has  no  use  for  some  parts  of  the  company’s  property  on  the  Eno  River. 

Under  these  conditions,  the  city  claims  that  the.  company  should 
take  part  of  the  loss  which  will  be  involved  if  the  Eno  River  plant  is 
given  up.  This  condition  is  one  created  by  the  city  itself.  In  our 
opinion,  the  Eno  River  supply  is  the  better  one  for  the  city.  It  is  clear- 
ly a more  economical  one,  both  as  to  construction  of  works  and  as  to 
operation  of  them.  The  quality  of  the  water  from  the  Flat  River 
and  from  the  Eno  River  is,  under  present  conditions,  substantially 
equal.  In  the  future,  the  additional  safety  provided  by  the  storage 
reservoir  which  is  planned  for  the  Eno  River  supply  will  render 
the  supply  a better  one  from  the  standpoint  of  sanitary  protection  than 
the  supply  from  the  Flat  River,  unless  corresponding  storage  is  pro- 
vided on  that  stream.  With  adequate  purification,  which  can  readily 
be  obtained,  either  river  will  render  a satisfactory  supply.  With  the 
storage  possible  above  the  company’s  property  on  Eno  River  an  ade- 
quate quantity  of  water  for  Durham  for  the  future  is  assured.  Under 
these  conditions,  it  seems  to  us  that  any  attempt  to  reduce  the  value  of 
the  property  below  that  which  we  have  given  as  the  fair  value  is  not 
equitable. 

For  your  information  we  have  drawn  up  a schedule  of  the  repro- 
duction cost  of  the  items  of  the  property  owned  by  the  company  which 
would  immediately  come  into  service  if  the  Flat  River  supply  were 
connected  to  the  company’s  mains  as  is  now  proposed.  Besides  these 
items,  there  is  at  the  Eno  River  Station  a considerable  amount  of 
equipment  which  the  city  could  make  use  of  to  advantage  in  connection 
with  the  supply  works  at  Flat  River.  We  have  estimated  the  saving 
to  the  city  if  these  items  were  used  on  the  basis  of  the  cost  of  repro- 
duction less  the  depreciation  and  less  the  cost  of  removing  and  haul- 
ing the  equipment  to  the  site  of  the  Flat  River  works.  The  12  inch  force 
mains  from  the  Eno  River  plant  to  the  reservoir  could  be  taken  up 
and  relaid  in  the  pipe  system.  We  have  estimated  the  value  of  this 
pipe  on  this  basis,  deducting  from  its  cost  first  its  depreciation  and 
then  the  cost  of  taking  up  and  hauling  the  pipe. 

We  have  estimated  the  remaining  equipment  at  Eno  River  at  the 
amount  for  which  we  believe  it  could  be  sold  either  for  use  for  other 
purposes  than  water  supply  or  for  scrap. 


Durham  Water  Company 


9 


Taking  these  values  together,  we  obtained  a figure  of  about  $504,000, 
as  shown  on  Table  T-39. 

MAINTAINABLE  NET  INCOME 

One  of  the  most  important  elements  in  the  valuation  of  a water 
works  plant  is  its  power  to  earn.  It  is  necessary  to  determine  whether 
the  plant  is  able  to  maintain  a satisfactory  net  income  under  fair  and 
reasonable  rates  while  it  is  giving  adequate  service.  In  order  to  ascer- 
tain this,  it  is  necessary  to  estimate  the  probable  future  growth  of  the 
city  and  the  probable  future  earnings  and  expenses.  It  is  not  necessary 
to  carry  this  estimate  for  a long  time  into  the  future,  but  only  to  such  a 
time  as  the  plant  can  be  put  in  thoroughly  good  condition. 

In  Table  T-30  we  have  shown  the  past  and  estimated  future  popu- 
lation of  Durham  and  of  the  district  supplied  by  the  Durham  Water 
Company,  together  with  the  past  and  estimated  future  earnings  and 
expenses. 

It  is  the  experience  of  nearly  all  cities  that  the  earnings  of  a water 
plant  increase  at  a more  rapid  rate  than  the  population.  This  is  be- 
cause people  are  constantly  using  more  water  for  all  purposes  and 
because  the  percentage  of  people  which  are  not  connected  to  the  plant 
is  growing  constantly  less. 

We  believe  that  the  figures  given  in  Table  T-30  are  below  those 
which  will  actually  be  obtained  in  the  future.  These  figures  are  taken 
as  conservative  ones  which  will  be  reasonably  certain  to  be  reached 
or  exceeded.  In  Table  T-31  we  have  shown  the  estimated  cost  of 
operation  and  earnings  for  the  next  five  years,  together  with  the 
estimated  cost  of  constructing  new  works  required  to  put  the  plant 
in  thoroughly  good  condition,  and  the  estimated  cost  of  extensions  to 
meet  the  increased  demand  for  water.  After  allowing  for  a fair 
return  on  the  additional  investment  required,  there  remains  during 
these  five  years  an  average  net  income  sufficient  to  return  7%  on 
$611,000.  This  would  allow  1%  to  be  set  aside  for  depreciation  and 
6%  to  be  paid  out.  If  the  Company  gives  up  the  water  works  to  the 
City,  it  will  mean  the  sacrifice  of  an  investment,  built  up  after  years 
of  struggle,  which  is  worth  $611,000.  If  the  City  should  take  these 
works,  put  them  in  thoroughly  good  condition,  and  operate  them  as  the 
water  company  has  done,  it  could  earn  a substantial  profit,  as  it  could 
obtain  the  money  at  a comparatively  low  interest  rate,  and  would  save 
in  taxes. 


ENO  RIVER  AS  A SOURCE  OF  SUPPLY 

We  have  examined  the  Eno  River  and  the  Flat  River  as  regards 
their  availability  for  water  supply  for  Durham.  In  our  opinion  the 
Eno  River  is  the  better  supply  and  should  be  continued  in  use  by  the 
city.  The  source  of  the  supply  is  closer  to  the  city  and  is  at  a higher 


10 


Durham  Water  Company 


elevation  than  the  Flat  River.  It  is,  therefore,  clearly  a cheaper  supply, 
both  as  to  the  cost  of  development  and  the  cost  of  operation.  It  will 
always  retain  this  advantage  and  the  greater  the  amount  of  water 
that  is  used  in  Durham,  the  greater  will  be  the  difference  between  the 
expense  involved  in  the  two  supplies. 

The  quality  of  the  water  as  obtained  from  the  two  rivers  is  under 
present  conditions  substantially  equal.  Neither  supply  will  be  satis- 
factory without  purification  and  either  of  them  will  be  satisfactory  if 
proper  purification  is  secured. 

On  the  Eno  River  near  the  company’s  plant  there  exists  an  excep- 
tionally good  location  for  a large  storage  reservoir.  By  the  construc- 
tion of  a dam  some  40  feet  in  height  some  600  million  gallons  of 
water  can  be  stored.  This  amounts  to  about  300  days’  storage  of  water 
at  the  present  rate  of  consumption  in  Durham.  The  construction  of 
this  reservoir  will  increase  the  available  supply  for  the  City,  will  pro- 
vide additional  water  power  for  pumping,  and  will  improve  the  quality 
of  the  water. 

With  this  storage  provided,  the  Eno  River  will  furnish  a sufficient 
quantity  of  water  for  the  city  of  Durham  for  a great  many  years  to 
come.  A city  of  100,000  to  150,000  population  or  more  can  be  supplied 
from  the  Eno  River  with  this  storage  available.  There  are  other 
sites  where  reservoirs  could  be  constructed  in  the  distant  future,  so 
that  the  Eno  River  will  suffice  as  the  Durham  supply  for  an  indefinite 
period. 

The  construction  of  this  dam  will  materially  benefit  the  quality  of 
the  water.  The  benefit  of  long  storage  is. well  recognized  among  those 
who  have  had  experience  with  the  water  supplies  in  this  country  and 
abroad.  Many  cities,  including  such  cities  as  New  York  and  Boston, 
rely  on  storage  to  protect  them  against  pollution  of  the  water  from 
streams  flowing  through  country  far  more  thickly  populated  than  the 
water  shed  of  the  Eno  River.  Neither  of  these  cities  has  a filter  plant. 
The  effect  of  storage  has  been  studied  with  great  care  by  the  officials 
in  charge  of  the  water  supply  for  the  city  of  London,  England.  Lon- 
don obtains  its  water  supply  from  streams  upon  the  catchment  areas 
of  which  there  is  a very  large  population  residing.  It  stores  this  water 
and  then  filters  it,  thus  obtaining  an  excellent  water.  The  advantage 
of  the  storage  of  water  in  reservoirs  is  shown  by  the  experience  of  the 
Metropolitan  Water  Board  of  London.  This  has  been  ably  set  forth  by 
Dr.  A.  C.  Houston,  the  Board’s  Director  of  Water  Examination,  who 
has  made  continued  studies  for  the  Board  since  its  consolidation  over 
ten  years  ago.  As  a result  of  Dr.  Houston’s  observations  over  a long 
period,  the  following  extract,  taken  from  his  book  entitled  “Studies 
in  Water  Supply,”  page  96,  may  be  quoted : 

“It  is  impossible  within  the  compass  of  this  work  to  do  more  than 


Durham  Water  Company 


11 


condense  the  chief  points  showing  the  advantages  accruing  from  the 
simple  storage  of  raw  river  water : 

(1)  Storage  reduces 

(a)  The  number  of  bacteria  of  all  sorts. 

(b)  The  number  of  bacteria  capable  of  growing  on  agar 

at  blood  heat. 

(c)  The  number  of  bacteria,  chiefly  excremental  bacteria, 

capable  of  growing  on  a bile-salt  medium  at  blood 
heat. 

(d)  The  number  of  coli-like  microbes. 

(e)  The  number  of  “typical”  B.  coli. 

(f)  The  amount  of  suspended  matter,  colour,  ammoniacal 

nitrogen  and  oxygen  absorbed  from  permanganate. 

(g)  The  hardness. 

(2)  Storage  alters  certain  initial  ratios,  for  example: 

(h)  It  reduces  the  number  of  “typical”  B.  coli  to  a propor- 

tionately greater  extent  than  it  does  the  number  of 
bacteria  of  all  sorts. 

(i)  The  colour  results  improve  relatively  to  a greater  extent 

than  those  yielded  by  the  permanganate  test. 

(3)  Storage,  if  sufficiently  prolonged,  devitalises  the  microbes  of 

water-borne  disease,  e.  g.,  the  typhoid  bacillus  and  the 
cholera  vibrio. 

(4)  Storage  produces  a marked  “leveling”  or  “equalizing”  effect. 

(5)  An  adequately  stored  water  is  to  be  regarded  as  a “safe 

water,”  and  the  “safety  change”  which  has  occurred  in  a 
stored  water  can  be  recognized,  and  demonstrated  by  ap- 
propriate tests. 

(6)  The  use  of  stored  water  permits  of  a constant  check  being 

maintained  on  the  safety  of  a water  supply  antecedent  to, 
and  irrespective  of,  filtration. 

(7)  The  use  of  stored  water  goes  far  to  neutralize  or  wipe  out 

the  gravity  of  any  charge  that  a water  supply  is  derived 
from  polluted  sources. 

(8)  The  use  of  adequately  stored  water  renders  any  accidental 

breakdown  in  the  filtering  arrangements  much  less  serious 
than  might  otherwise  be  the  case.” 

Not  only  would  the  long  storage  materially  benefit  the  water  as  to 
its  sanitary  quality,  but  it  would  make  the  operation  of  filters  simpler 
and  cheaper.  It  would  serve  to  dilute  any  small  mill  wastes  which 
now  enter  the  Eno  River,  so  that  the  water  would  not  be  subject  to  any 


12 


Durham  Water  Company 


sudden  changes  as  to  alkalinity.  With  this  storage  provided  on  Eno 
River,  the  quality  of  the  raw  water  would  be  superior  to  that  from 
the  Flat  River  unless  an  equivalent  amount  of  storage  were  there 
provided. 

By  the  construction  of  this  dam,  a large  increase  in  the  available 
water  power  would  be  obtained.  We  have  examined  the  records  of 
the  Durham  Water  Company  as  to  its  pumpage  by  water  power  in 
the  past,  have  examined  the  records  of  stream  flow  for  streams  in  the 
vicinity  of  Durham  and  have  estimated  that  from  80  to  90  per  cent  of 
the  total  water  used  by  Durham  at  the  present  time  could  be  pumped 
by  water  power  with  the  increased  head  and  water  made  available  by 
the  construction  of  the  storage  reservoir.  We  have  estimated  the  cost 
of  this  improvement  and  find  that  the  saving  effected  by  the  use  of 
the  water  power  is  sufficient  to  furnish  a fair  return  on  the  invest- 
ment involved.  The  construction  of  this  reservoir  would,  therefore, 
not  reduce  the  available  net  return  to  the  company.  In  the  future, 
as  the  consumption  of  water  increases,  the  value  of  the  water  power 
would  be  greater. 

REPRODUCTION  COST 

Our  estimate  of  the  cost  of  reproduction  of  the  physical  plant  is 
based  on  conditions  as  they  existed  on  the  date  of  this  appraisal, 
January  1,  1916,  and  upon  normal  prices.  By  normal  prices  we  mean 
the  .prices  which  have  on  the  average  prevailed  during  recent  years 
and  which  may  reasonably  be  anticipated  in  the  immediate  future. 
We  have  not  used  the  prevailing  prices  at  the  exact  date  of  appraisal 
as  prices  fluctuate  with  the  market  while  the  values  of  water  works 
properties  do  not.  Using  normal  prices  gives  the  normal  reproduction 
cost.  For  this  appraisal  it  would  have  been  distinctly  advantageous  to 
the  Company  if  the  present  higher  prices  of  material  had  been  used. 
For  instance,  the  cost  for  cast  iron  pipe  in  the  system,  excluding  any 
cost  for  laying,  has  been  estimated  at  about  $180,000.  If  the  pre- 
vailing price  as  of  January  1,  1916  had  been  used,  this  would  have 
been  increased  by  about  $8,000.  The  prices  used  are  intended  to  be 
sufficient  so  that  the  works  could  be  actually  built  for  them  by  the  com- 
pany or  by.  the  city  under  careful  business  management.  They  are 
intended  to  include  reasonable  compensation  for  all  material  and  labor 
used,  including  a profit  for  such  contractors  as  would  naturally  be 
employed.  They  do  not  include  any  profit  to  the  company,  but  only  the 
actual  net  cost  in  money  to  the  company. 

We  have  obtained  all  the  information  which  we  could  as  to  the 
actual  cost  to  the  company  of  the  various  items  in  the  plant.  We 
have  given  these  prices  due  consideration  in  making  up  our  repro- 
duction cost.  In  many  cases  our  estimates  of  reproduction  cost  are 
materially  less  than  the  actual  cost  to  the  company,  because  we  have 
estimated  on  the  cost  of  doing  work  under  contracts  of  considerable 


Durham  Water  Company 


13 


magnitude,  while  the  work  has  actually  been  done  piecemeal  at  a 
greater  cost. 

In  making  our  estimate,  we  have  made  a careful  study  of  the  con- 
ditions existing  in  Durham  as  affecting  the  cost  of  doing  the  work. 
We  have  studied  the  cost  of  laying  pipe  and  doing  other  work  in 
Durham  and  in  other  cities  and  towns  in  this  section  of  the  country. 
We  have  also  considered  the  data  furnished  us  by  Mr.  White  as  to 
contract  prices  for  laying  pipe  lines  and  other  works. 

PIPE  LAYING 

It  must  be  remembered  in  comparing  pipe  laying  prices  that  the 
difference  in  the  character  of  the  excavation,  the  difference  in  the  labor 
conditions,  the  amount  of  congestion  in  the  streets,  and  other  matters, 
affect  them  materially.  Prices  obtained  for  easy  digging,  or  those 
obtained  for  laying  pipe  in  small  villages  and  in  the  outlying  sections 
of  cities  cannot  be  used  without  modification  for  conditions  which 
exist  in  Durham. 

The  estimate  which  we  have  given  we  consider  to  be  as  low  as  it 
would  be  possible  to  lay  pipe  in  Durham  by  a contractor  in  a thorough- 
ly workmanlike  manner,  with  a reasonable  profit,  under  normal  con- 
ditions. 

In  considering  prices  which  have  been  secured  in  the  last  few 
years,  it  must  be  remembered  that  contract  work  has  been  scarce  and 
that  contractors  have  taken  work  in  many  cases  at  little  or  no  profits. 
Such  conditions  will  not  continue  and  are  not  normal  conditions.  It 
must  also  be  remembered  that  many  contracts  are  taken  at  too  low  a 
figure.  Generally  when  this  is  done,  the  contractor,  finding  that  he  is 
losing  money,  does  poorer  work  than  would  otherwise  be  the  case. 
In  this  way  the  owner  also  suffers. 

We  believe  that  it  is  not  a fair  basis  of  valuation  to  take  the  lowest 
prices  which  can  be  obtained  in  competitive  bidding.  These  prices  are 
well  known  not  to  represent  the  cost  of  pipe  well  laid ; they  do  not 
cover  the  many  extras  which  come  into  the  case,  and  do  not  cover  the 
frequent  additional  expense  due  to  the  fact  that  in  many  cases  the 
bondsmen  have  to  finish  the  contract ; they  do  not  cover  the  cases 
where  the  contractor  receives  as  extras  an  amount  which  makes  the 
actual  cost  materially  in  excess  of  that  obtained  by  using  unit  prices 
taken  from  his  bid.  These  facts  are  well  recognized  by  the  courts 
and  commissions  which  have  had  experience  in  valuation. 

In  comparing  the  cost  of  laying  pipe  in  Durham  with  the  cost  of 
laying  elsewhere  in  the  vicinity,  it  must  be  remembered  that  the  ex- 
cavation in  many  places  in  the  South  is  comparatively  easy  and  can 
be  done  at  a lesser  cost  than  would  be  required  for  the  work  in 
Durham.  A certain  proportion  of  the  excavation  in  Durham  will  be 


14 


Durham  Water  Company 


sand  rock,  which  will  require  considerable  additional  expense,  although 
it  may  not  be  classed  as  hard  rock  excavation. 

Some  of  the  pipe  laying  in  Durham  will  cost  much  in  excess  of  the 
figure  which  we  have  given.  At  places  where  the  streets  are  con- 
gested, where  difficulty  will  be  met  with  in  handling  the  material, 
where  unforseen  underground  obstructions  are  encountered,  where 
trolley  tracks  and  railroads  will  have  to  be  crossed,  and  where  other 
obstructions  are  encountered,  there  will  be  much  additional  cost.  If  a 
contract  was  let  for  pipe  laying,  under  the  conditions  ordinarily  found 
in  small  villages,  the  overcoming  of  all  of  these  difficulties  would  be 
extra  work  and  would  amount  to  a large  proportion  of  the  cost  of  lay- 
ing. We  have  estimated  a figure  of  from  2 to  3 cents  per  foot  for 
all  the  pipe  in  the  city  for  the  additional  cost  of  overcoming  these  ob- 
stacles. In  some  streets  of  the  city  the  cost  will  be  more  than  double 
the  cost  in  others  and  this  allowance  is  taken  as  an  average  figure. 
In  cities  in  the  North  of  similar  size  and  character  as  Durham,  but 
with  somewhat  more  difficult  conditions,  the  estimate  has  frequently 
been  5 and  6 cents  per  foot  for  the  same  item. 

CAST  IRON  PIPE 

In  obtaining  a proper  cost  to  allow  for  the  cast  iron  pipe  in  the 
system,  we  ascertained  the  prices  which  the  company  has  paid  the 
last  ten  years  and  prices  which  have  been  paid  elsewhere  in  this 
locality.  We  find  that  in  general  the  prices  thus  obtained  agree  very 
closely  with  New  York  tidewater  prices  during  times  when  prices  are 
not  abnormally  high  or  low.  The  prices  in  the  South  do  not,  however, 
go  to  quite  the  low  levels  that  the  New  York  prices  do.  This  fact 
has  been  noted  not  only  in  Durham,  but  elsewhere,  and  it  is  probable 
that  the  pipe  manufacturers  are  able  to  somewhat  control  the  prices 
and  keep  them  from  going  to  the  low  levels  which  are  the  direct  result 
of  strong  competition.  We  have  taken  for  cast  iron  pipe  a price 
per  ton  of  $26  for  6"  pipe.  This  represents  the  average  price  at  which 
pipe  could  be  obtained  at  Durham  during  the  past  ten  3-ears.  This 
price  is  materially  less  than  the  present  price  of  cast  iron  pipe  in  Dur- 
ham. The  quotation  on  January  1st  for  pipe  in  Durham  was  at  the  rate 
of  $27  per  ton.  Since  that  time  the  price  of  pipe  has  increased  and 
it  is  likely  that  it  will  further  increase.  The  average  price  for  the 
past  ten  years  is  clearly  a conservative  estimate. 

In  this  connection  it  may  be  noted  that  the  pipe  which  the  Durham 
Water  Company  has  placed  has  been  thoroughly  tested  out.  It  has 
been  in  the  ground  and  tested  under  conditions  equivalent  to  any  which 
it  will  have  to  stand.  Such  pipe  as  was  of  poor  quality  has  broken 
and  been  replaced.  The  pipe  that  is  in  the  ground  is  equivalent  to 
pipe  which  has  been  thoroughly  tested  at  the  mill.  The  cost  of  such 
testing  is  considerable,  but  no  allowance  is  made  for  it. 


Durham  Water  Company 


15 


During  the  life  of  the  company,  the  grade  of  streets  has  been  chang- 
ed from  time  to  time  and  the  company  has  had  to  lower  the  pipe  to 
meet  these  changes  in  grade.  No  allowance  has  been  made  for  this, 
but  it  may  be  mentioned  as  one  of  the  points  which  should  be  fairly 
considered  if  the  actual  cost  to  the  company  for  construction  work 
were  to  be  taken. 

SPECIALS 

The  price  taken  for  specials  is  2.8  cents  per  pounds,  which  is  ap- 
proximately the  average  price  paid  for  specials  during  the  last  ten 
years. 

LEAD 

We  have  used  5*4  cents  per  pound  as  the  proper  cost  of  lead, 
which  represents  a normal  price  for  this  material  in  Durham. 

GATES  AND  HYDRANTS 

We  have  studied  the  actual  cost  of  gates,  hydrants  and  appur- 
tenances to  the  water  company  and  have  compared  them  to  prices 
which  prevail  elsewhere.  These  prices  are  reasonable  ones  and  we  have 
used  them.  In  the  case  of  the  connections  which  the  company  has  made 
with  the  Smith  tapping  machine,  we  have  considered  that  these  would 
be  replaced,  if  new  works  were  built,  by  ordinary  specials  and  gates. 
The  object  of  the  tapping  machine  is  to  make  the  connections  against 
pressure,  thus  avoiding  shutting  off  the  pipe.  For  new  construction 
this  would  not  be  necessary  and  we  have  estimated  on  the  cheaper 
method  of  doing  the  work. 

SERVICES 

The  original  cost  of  installing  the  .service  pipes  has  been  paid  by 
the  consumer,  the  company  making  the  tap  and  charging  a nominal 
price  for  it. 

The  services  have  been  maintained  by  the  company.  Many  of  them 
have  been  replaced.  In  some  places  where  new  mains  have  been  laid 
to  replace  older  mains,  all  the  services  have  been  taken  out  and  largely 
replaced.  That  the  company  does  have  some  ownership  in  these  ser- 
vics  is  clear.  This  point  has  been  frequently  brought  up  before  courts 
and  allowances  have  been  made.  No  specific  allowance  has  been  made 
for  this  item  in  our  estimate.  We  have  considered  this  as  one  of  the 
intangible  values  of  the  property. 

ADDITIONAL  COST  OE  LAYING  MAINS  UNDER  PAVING 

We  have  made  an  allowance  for  the  cost  of  cutting  and  replacing 
paving  which  exists  in  the  streets  over  the  pipe  lines.  If  a new  water 
works  pipe  system  were  to  be  laid  now,  it  would  be  necessary  to  cut 
this  paving,  to  save  the  material  so  far  as  it  could  be  used  again,  to 


16 


Durham  Water  Company 


take  precautions  in  backfilling  the  trench  so  that  settling  would  not 
result,  and  to  replace  the  paving  as  nearly  as  possible  in  its  present 
condition. 

WROUGHT  IRON  AND  APPURTENANCES 

Considerable  quantities  of  wrought  iron  pipe,  on  which  we  have 
put  a present  value  of  $15,667,  have  been  laid  in  the  section  of  the 
city  where  the  amount  of  business  to  be  obtained  was  not  sufficient  to 
render  a fair  return  on  the  investment  required  for  larger  cast  iron 
mains.  The  laying  of  this  pipe  is  common  practice  in  cities  of  the 
South  and  is  fully  justified  under  the  existing  conditions.  Ultimately, 
as  the  business  increases,  much  of  this  pipe  may  be  replaced  by  cast 
iron  mains.  In  the  interval,  however,  the  saving  in  interest  on  the 
investment  will  cover  the  cost  of  the  pipe. 

METERS 

The  estimated  cost  of  reproduction  of  the  meters  is  considerably 
less  than  the  actual  cost  to  the  company.  The  unit  prices  allowed 
are  those  for  which  a large  quantity  of  meters,  such  as  would  be  re- 
quired if  the  plant  were  reproduced  as  a whole,  would  be  purchased 
and  installed.  We  may  call  attention  to  the  fact  that  the  price  thus 
allowed  for  meters  is  less  than  has  generally  been  made  in  appraisals. 

STRUCTURES  AND  EQUIPMENT  AT  EN0  RIVER 

We  made  a study  of  the  actual  cost  of  the  structures  and  equip- 
ment at  the  Eno  River  Station  and  have  used  the  actual  cost  to  the 
company  for  items  whose  cost  represents  normal  prices  under  present 
conditions.  In  many  cases  the  information  as  to  the  actual  cost  is  not 
sufficiently  complete  to  enable  it  being  used.  In  such  cases  we  have 
estimated  the  reproduction  cost.  We  may  call  your  attention  to  the 
fact  that  the  older  machinery  and  the  filters  have  been  depreciated 
largely,  as  they  are  approaching  the  end  of  their  usefulness.  Details 
of  the  estimate  for  the  Eno  River  plant  are  given  in  schedule  on  Page 
T-2. 

The  amount  of  equipment  installed  in  the  pumping  station  in  the 
last  three  years  has  been  large,  and  as  a result  the  average  age  of  all 
the  pumping  equipment  is  but  6.2  years.  The  average  age  of  the 
buildings  is  13  years. 

RESERVOIR 

The  estimated  reproduction  cost  of  the  distribution  reservoir  has 
been  taken  as  the  cost  to  build  under  normal  prices  of  labor.  We 
have  considered  that  the  reservoir  would,  if  reproduced  now,  probably 
be  built  cheaper  of  concrete  instead  of  stone  masonry,  and  have  ac- 
cordingly made  our  estimate  lower. 


Durham  Water  Company 


17 


ENGINEERING  AND  CONTINGENCIES 

We  have  allowed  \2]/2  per  cent  of  the  base  cost  of  structures  for 
engineering,  administration,  contingencies  and  errors  and  omissions. 
This  allowance  is  intended  to  cover  the  cost  of  the  services  of  engi- 
neers, administrative  officers,  lawyers  and  others  whose  services  are 
required  for  the  planning  and  building  of  the  works,  the  errors  and 
omissions  from  the  inventory  and  the  many  items  of  expense  which 
have  to  be  met  with  during  construction  of  the  works  and  which 
cannot  be  well  foreseen. 

INTEREST  DURING  CONSTRUCTION 

Six  per  cent  for  interest  during  construction  is  allowed.  It  is  as- 
sumed that  it  will  take  two  years  after  the  construction  of  the  plant  is 
started  before  it  could  be  put  into  actual  service.  The  money  to  pay 
for  the  construction  work  would  have  to  be  advanced  from  time  to 
time  during  this  interval.  Interest  on  this  money  must  be  paid.  On 
the  payments  for  some  of  the  early  work  a full  two  years’  interest 
will  accrue,  while  for  the  last  payments  there  will  be  practically  no 
interest.  The  figure  used  represents  an  average  for  the  whole  system. 

LAND,  WATER  RIGHTS  AND  EASEMENTS 

For  land,  water  rights  and  easements,  we  have  used  for  the  repro- 
duction cost,  so  far  as  it  can  be  ascertained,  the  actual  cost  of  these 
items  to  the  company  at  the  time  of  purchase.  No  allowance  for 
value  due  to  favorable  location  or  usefulness  for  water  supply  pur- 
poses has  been  made.  We  have  allowed  S per  cent  overhead  charge 
on  the  land  to  cover  surveys,  legal  and  administration  expenses  con- 
nected with  its  acquisition.  We  have  allowed  6 per  cent  interest  per 
annum  for  two  years  on  the  land,  as  it  would  be  necessary  to  acquire 
all  the  land  before  the  plant  was  started  and  the  interest  would  accrue 
during  the  entire  construction  period. 

GOING  VALUE 

Going  value  may  be  defined  as  that  which  represents  the  difference 
in  value  between  the  pipes  connected  with  consumers  and  earning 
revenue  and  a corresponding  system  of  pipes  equally  complete  but 
without  actual  connections  or  contracts  or  revenue.  The  difference 
in  value  is  represented  by  the  difference  in  revenue  that  the  two 
plants  otherwise  equal  would  secure,  one  with  the  full  businss  at- 
tached and  the  other  with  the  business  to  be  acquired. 

It  may  be  accepted  as  a fact  that  almost  any  water  company  dur- 
ing its  early  years  fails  to  make  a fair  return  on  the  capital  invested 
.and  that  there  is  an  actual  cost  to  the  company  in  acquiring  the 
business.  That  it  cost  the  Durham  Water  Company  a much  larger 
amount  to  acquire  the  business  than  we  have  estimated  as  the  going 


2 


18 


Durham  Water  Company 


value  is  evident  from  the  financial  records  of  the  early  years  of  the 
company’s  existence. 

The  amount  of  going  value  may  be  estimated  by  considering  the 
history  and  the  probable  future  of  the  present  plant  and  comparing 
it  with  another  plant  similar  in  all  respects  except  that  at  the  start 
it  would  be  without  business.  The  difference  in  the  net  earnings  of 
the  two  plants  reduced  to  its  present  worth  is  the  amount  of  the  going 
value.  The  details  of  this  computation  for  obtaining  going  value  are 
shown  in  Table  T -32, 

Valuable  information  as  to  the  rate  at  which  new  water  works 
are  able  to  acquire  business  is  furnished  by  the  experience  of  the 
City  of  New  Orleans,  where  a new  water  works  plant  was  built  in  its 
entirety  and  put  in  service  as  rapidly  as  possible.  This  plant  was 
started  early  in  the  year  1909.  Prior  to  that  date  there  was  a small 
water  company  which  furnished  muddy  Mississippi  River  water  to  a 
small  percentage  of  the  population.  Practically  the  city  depended  on 
cisterns  for  its  water  supply  for  domestic  uses.  The  need  for  a 
satisfactory  water  supply  was  urgent,  as  it  was  generally  recognized 
that  the  use  of  cisterns  had  much  to  do  with  the  unsatisfactory  health 
conditions  in  the  city.  In  order  to  make  the  use  of  the  water  as  gen- 
eral as  possible,  unusually  low  rates  were  charged.  In  spite  of  all 
the  favorable  conditions  for  acquiring  the  business,  it  has  taken  six 
years  to  get  82  per  cent  of  the  premises  connected  to  the  pipe  system. 

In  Table  T-36  we  have  shown  the  statistics  taken  from  the  official 
reports  of  the  New  Orleans  Water  Department  as  to  the  rate  of  ac- 
quiring the  consumers.  In  the  last  column  of  this  table  we  have 
shown  for  comparison  the  rate  at  which  we  have  estimated  that  the 
business  would  be  acquired  in  Durham  if  a new  water  company  should 
start  busines  at  this  time.  It  will  be  noted  that  the  rate  which  we  have 
estimated  is  much  more  rapid  than  that  which  actually  resulted  in 
New  Orleans.  Our  estimate  is  a conservative  one  and  under  the  con- 
ditions existing  in  Durham  the  business  could  scarcely  be  acquired 
more  rapidly  than  we  have  assumed  and  might  come  much  more 
slowly. 

ADVANTAGES  TO  THE  CITY  NOT  CONSIDERED  IN  THE  ESTIMATES 

There  are  many  elements  involved  which  make  it  more  desirable 
for  the  city  to  acquire  the  Durham  Water  Company’s  plant  in  prefer- 
ence to  building  a new  distribution  system.  Among  these  may  be  men- 
tioned the  following: 

The  present  pipes  are  tapped  for  house  services.  If  a new  system 
were  installed  by  the  city,  the  cost  of  this  tapping  would  have  to  be 
borne  by  either  the  city  or  by  the  consumers.  The  service  pipes  are 
now  installed  and  connected  to  the  taps  on  the  company’s  mains.  Ir- 


Durham  Water  Company 


19 


respective  of  the  ownership  of  these  services,  it  would  be  necessary  to 
have  them  connected  to  the  new  system.  In  making  the  change  from 
the  present  system  to  the  new  system,  many  of  the  old  pipes  which  are 
now  and  will  remain  for  some  time  entirely  serviceable  would  be 
broken  or  would  be  made  to  leak.  It  would  be  found  that  much  ex- 
pense would  be  involved  in  changing  these  services  from  one  system 
of  pipes  to  the  other.  As  we  have  already  mentioned  in  the  report, 
the  company  has  replaced  many  of  the  services  and  can  justly  claim 
at  least  partial  ownership  in  them. 

In  order  to  install  the  new  distribution  system,  every  street  in  the 
city  would  have  to  be  dug  up  while  the  new  pipes  were  being  laid. 
During  the  progress  of  the  work,  more  or  less  damage  would  be  caus- 
ed to  the  property  of  other  utilities  and  to  private  property.  Actual 
loss  of  business  due  to  the  bad  conditions  of  the  streets  always  results 
from  such  work.  It  is,  moreover,  inconvenient  and  annoying  to  the 
entire  population.  To  have  the  streets  of  the  city  in  such  condition 
means  that  each  individual  person  suffers  to  some  extent.  These 
matters  are  not  given  any  specific  value  in  this  estimate,  but  they  should 
be  considered  by  the  city  in  considering  the  purchase  of  the  plant  at 
a fair  value  based  on  the  other  elements  of  value  of  the  plant  to  the 
company. 

franchise  value 

Under  the  terms  of  the  franchise,  the  city  would  normally  take 
the  water  company’s  property  on  April  1,  1918.  If  the  company  sells 
the  plant  now,  it  loses  the  revenues  from  the  business  in  the  interval. 
If  the  company  by  continuing  its  business  can  earn  a net  rate,  after 
paying  all  operating  expenses  and  a fair  allowance  for  depreciation, 
which  is  in  excess  of  the  amount  of  interest  which  the  money  ob- 
tained from  the  sale  of  the  plant  would  earn,  it  is  clear  that  the  com- 
pany is  making  a sacrifice  in  selling  the  plant  at  the  present  time.  The 
difference  between  the  net  earnings  of  the  company  and  the  amount 
earned  from  a safe  investment  of  the  money  obtained  from  the  sale 
of  the  plant  discounted  to  the  present  time  may  be  taken  as  the  fran- 
chise value.  This  value  has  been  allowed  by  the  courts  in  other  cases 
and  it  has  been  recognized  that  the  franchise  has  a value  distinct  from 
the  going  value.  We  have  estimated  this  franchise  value  in  Table 
T -37.  We  may  call  your  attention  to  the  fact  that  this  franchise  value 
is  dependent  on  the  value  which  is  placed  on  the  other  elements  of 
value  in  the  plant;  that  is,  with  a smaller  estimated  value  of  the  plant 
a larger  franchise  value  is  obtained. 

The  relation  between  the  franchise  value  and  the  value  of  the 
plant  excluding  franchise  value,  together  with  the  details  of  the  com- 
putation of  the  franchise  value,  are  shown  in  Table  T-37-38. 


20 


Durham  Water  Company 


DEPRECIATION 

During  the  past  few  years,  the  matter  of  the  proper  depreciation  to 
be  allowed  on  water  works  plants  and  other  public  utilities  has  been 
given  much  consideration  by  engineers,  public  utility  commissions 
and  the  courts.  Extended  discussions  of  this  matter  have  been  pub- 
lished and  a more  thorough  understanding  of  it  has  been  obtained 
than  formerly  was  the  case.  It  has  been  recognized  that  methods  of 
depreciation  which  may  be  applicable  to  properties  where  the  units 
are  of  comparatively  short  life  and  which  have  to  be  frequently  re- 
newed are  not  equitable  when  applied  to  the  long-lived  structures  in- 
volved in  water  works  and  similar  utilities.  The  so-called  straight 
line  method  of  depreciation — that  is,  the  method  of  taking  off  a fixed 
percentage  of  the  value  of  a structure  each  year,  this  percentage  to 
be  the  ratio  between  the  age  and  the  assumed  life  of  a structure,  is 
not  an  equitable  one  for  use  with  long-lived  structures.  The  so-calldd 
sinking  fund  method  is  now  generally  used.  By  this  method  the  de- 
preciation is  made  the  equivalent  of  a sinking  fund  which,  with  its 
accrued  interest,  will  be  sufficient  to  replace  the  structure  at  the  end 
of  its  life. 

To  illustrate  the  difference  in  the  two  methods  of  depreciation,  it 
may  be  useful  to  consider  the  more  familiar  case  of  a sinking  fund 
for  bonds.  We  have  given  in  the  table  below  the  results  which  would 
be  obtained  if  the  principles  involved  were  applied  to  such  a case. 


CREATION  OF  A FUND  TO  RETIRE  $500,000  OF  50 
YEAR  BONDS 


USING  SINKING  EUND  METHOD 

Amount  required  to  be  set  aside 
each  year  at  4%  interest, 

.00655  X $500, 000=$3, 275 

Total  amount  of  sinking  fund  at 
end  of  50  years, 

Principal  $163,750 

Accrued  interest  at  4%...  336,250 


$500,000 


USING  METHOD  INVOLVING  SAME 
PRINCIPLE  AS  THE  STRAIGHT  LINE 
METHOD  OF  depreciation 

Amount  required  to  be  set  aside 
each  year, 

$500,000 

=$10,000 

50 

Total  amount  of  fund  at  end  of 
50  years,  at  4%  interest, 


Principal  $ 500,000 

Accrued  interest  1,026,670 


$1,526,670 


The  first  of  the  above  methods  is,  of  course,  the  one  used  in  pro- 
viding sinking  funds  for  bonds.  It  is  the  proper  method  and  provides 


Durham  Water  Company 


21 


all  the  funds  necessary  to  pay  the  bonds.  In  the  second  method  it 
will  be  seen  that  the  amount  to  be  set  aside  yearly  is  such  that  over 
three  times  the  necessary  funds  result.  Exactly  the  same  will  result 
if  the  straight  line  method  is  applied  to  depreciation. 

Utility  Commissions  have  in  many  cases  advised  that  the  com- 
panies should  not  be  required  to  carry  an  actual  sinking  fund  in- 
vested in  other  securities,  but  should  rather  re-invest  the  money 
put  aside  for  depreciation  in  the  plant  itself.  In  this  way  the  money- 
usually  can  earn  a higher  rate  of  return  than  it  could  if  it  were  put 
aside  in  other  securities.  As  nearly  all  water  companies  need  ex- 
tensions and  improvements,  the  money  can  be  thus  used  to  advantage. 
The  Durham  Water  Company  has  consistently  followed  this  prac- 
tice. It  has  not  only  put  its  depreciation  fund  into  its  plant,  but  it 
has  also  put  the  greater  part  of  its  earnings  into  it.  The  Company  has 
not  regularly  paid  the  interest  on  its  bonds,  but  has  instead  put  the 
earnings  directly  back  into  the  plant.  Under  these  conditions  it  is 
clear  that  the  company  has  provided  in  its  plant  the  full  equivalent 
to  a sinking  fund. 

It  is  sometimes  stated  to  justify  the  use  of  the  straight  line  method 
that  if  a piece  of  property  has  been  used  for  one-half  its  useful  life 
it  is  worth  only  one-half  of  its  value  when  new.  This  statement  while 
plausible  is  erroneous.  It  overlooks  the  fact  that  we  are  measuring 
worth  in  money,  that  money  earns  interest  and  that  the  money  to  be 
paid  now  is  worth  more  than  money  to  be  paid  in  the  future.  If 
the  property  is  equally  useful  for  supplying  water  and  the  conditions 
remain  otherwise  the  same,  the  earnings  from  it  will  be  just  as  great 
during  the  last  half  of  its  life  as  during  the  first  half.  Under  these 
conditions,  if  the  straight  line  method  is  used,  the  owner  of  the  prop- 
erty during  the  first  half  of  its  life  would  have  to  carry  an  interest 
charge  on  a capital  of  exactly  double  that  carried  by  the  owner  of 
the  property  during  the  second  half  of  its  life,  while  the  returns  would 
be  the  same.  In  such  a case,  the  owner  of  the  property  during  the 
first  half  of  its  life  might  be  unable  to  earn  a reasonable  interest  on 
the  capital,  while  the  owner  during  the  second  half  made  a substan- 
tial profit  over  and  above  his  interest  charges.  This  is  clearly  unjust, 
but  it  is  the  fact  which  exists  if  the  straight  line  method  is  accepted 
and  used  for  depreciating  public  utility  properties. 

ILLUSTRATIONS  OF  DIFFERENCE  IN  RESULTS  OBTAINED 
BY  THE  USE  OF  THE  TWO  METHODS 
OF  DEPRECIATION 

In  the  following  table  we  have  shown,  using  round  numbers  for 
convenience,  the  results  obtained  by  using  the  two  methods  of  de- 
preciation for  a case  similar  to  that  existing  in  Durham. 


22 


Durham  Water  Company 


Assumptions:  (Using  round  numbers  for  convenience). 

Cost  of  reproduction  of  physical  property,  new $500,000 

Useful  life,  of  plant  50  years 

Age  of  plant  15  years 

Accrued  depreciation  at  end  of  15  years,  on  straight  line 

method  150,000 

Accrued  depreciation  at  end  of  15  years,  on  sinking  fund 

» method,  4%  interest  basis 65,579 

Cost  of  reproduction,  less  depreciation,  by  straight  line 

method  $500,000— $150,000=  350,000 

Cost  of  reproduction  less  depreciation,  by  sinking  fund 

method  $500,000— $65,579=  434,421 


CASE  I 

USING  “SINKING  FUND”  DEPRECIATION  METHOD 

Assuming  that  a city  has  $500,000  in  cash  to  use  and  that  an  exist- 
ing plant  could  be  purchased  for  the  cost  of  reproduction  less  the  ac- 
crued depreciation  at  the  end  of  the  15  years,  it  could  either  build  a new 
plant  for  $500,000  cash  or  purchase  the  existing  one.  If  the  existing 
plant  were  purchased,  $65,579  the  amount  of  the  accrued  depreciation 
could  be  invested  in  securities,  while  if  a new  plant  were  built  the 
total  amount  would  have  to  go  into  construction.  The  earnings  from 
the  property  would  be  the  same  in  either  case.  The  results  to  the  City 
are  given  below : 


IF  CITY  BUILDS  NEW  PLANT 

Cost  to  build $500,000 

Value  of  plant  at  end  of  35 
years  from  date  of  purchase, 
using  sinking  fund  method  of 
depreciation,  on  4%  interest 
basis,  $500,000  less  dep.  258,780 

Total  value  of  property  owned 
by  city  at  end  of  35  years 

258,780 


IF  CITY  PURCHASES  AN  EXISTING 
PLANT,  15  YEARS  OLD 

Cost  to  purchase  existing  plant 
$434,421 

Sum  which  could  be  invested 

65,579 

Value  of  plant  at  end  of  35 
years  from  date  0 

Amount  of  the  principal  of 
$65,579  and  compound  inter- 
est, at  4%,  for  35  years  258,780 


In  the  above  case  it  is  clear  that  the  city  is  equally  well  off  at 
the  end  of  35  years,  whether  it  builds  a new  plant  or  purchases  the 
existing  one,  and  that  the  method  is  a fair  one  for  both  parties. 


Durham  Water  Company 


23 


CASE  II 

USING  STRAIGHT  LINE  METHOD  OF  DEPRECIATION 

Using  same  assumptions  as  in  Case  I,  except  that  in  this  case  the 
amount  available  for  investment  in  other  securities  would  be  $150,000 
instead  of  $65,579. 


IF  CITY  BUILDS  NEW  PLANT 

Cost  to  build  $500,000 

Value  of  plant  at  end  of  35 
years,  using  straight  line  me- 
thod of  depreciation. ...  150,000 

Total  value  of  property  at  end 
of  35  years  $150,000 


IF  CITY  PURCHASES  EXISTING  PLANT 

Cost  to  purchase  existing  plant 
$350,000 

Amount  which  can  be  invested 
$150,000 

Value  of  plant  at  end  of  35 
years  0 

Amount  of  principal  of  $150,000 
with  compound  interest  at 
4%,  for  35  years $592,000 


From  the  above  it  is  seen  that  if  the  straight  line  method  of  de- 
preciation were  used,  at  the  end  of  the  thirty-five  year  period,  if  the 
city  had  purchased  the  existing  plant,  the  value  of  its  property  would 
be  $442,000  more  than  if  it  had  built  a new  plant.  Such  a result  is 
clearly  unjust  to  the  company  and  shows  that  the  allowance  for  ac- 
crued depreciation  by  the  straight  line  method  is  excessive. 

We  may  call  attention  to  the  fact  that  in  a recent  report  of  the 
Committee  on  Valuation  of  the  American  Society  of  Civil  Engineers 
the  Sinking  Fund  Method  of  Depreciation  was  recommended  and  that 
it  is  now  in  general  use. 

We  have  used  the  sinking  fund  method  of  depreciation  in  this  ap- 
praisal for  all  structures  which  we  have  depreciated  in  accordance 
with  a definite  term  of  useful  life.  For  some  of  the  structures  other 
methods  of  determining  depreciation  are  clearly  better  and  have  been 
used.  For  cast  iron  pipe,  the  life  of  which  is  unknown,  which  has  in 
some  cities  been  used  over  100  years  and  which  it  is  generally  admitted 
will  last  for  a very  long  time,  the  depreciation  can  be  better  estimated 
by  determining  its  relative  usefulness  as  compared  to  new  pipe.  The 
cast  iron  itself  may  be  considered  as  practically  indestructible.  It  is 
true,  however,  that  cast  iron  pipe  becomes  more  or  less  tuberculated 
with  deposits  in  time  and  that  the  carrying  capacity  of  the  pipe  be- 
comes somewhat  less. 

Many  experiments  have  been  made  to  determine  the  loss  in  carry- 
ing capacity  of  the  pipe  from  this  cause.  This  loss  varies  with  differ- 
ent waters  and  conditions.  We  have  examined  the  pipe  systems  in 


24 


Durham  Water  Company 


many  different  cities  and  have  determined  the  loss  in  capacity  for 
many  different  pipes.  We  have  depreciated  the  value  of  the  pipes  in 
the  Durham  Water  Company’s  system  on  this  basis.  Evidence  as  to  the 
condition  of  the  pipe  is  furnished  by  specimens  of  the  pipe  removed 
and  also  by  the  fact  that  the  friction  in  the  pipes  of  the  supply  mains  is 
not  large.  The  tuberculation  in  some  of  the  pipes  is  undoubtedly 
greater  than  in  others.  A piece  of  the  original  pipe  taken  from  the 
12  inch  force  main  from  the  pumping  station  to  the  reservoir,  laid 
some  twenty-eight  years  ago,  shows  very  little,  if  any,  tuberculation 
after  this  period  of  service.  There  is  a thin  layer  of  dirt  in  the  bot- 
tom of  the  pipe.  Its  carrying  capacity  is  practically  as  great  as  when 
it  was  put  down.  The  tar  coating  originally  put  on  is  still  in  good 
condition.  The  value  of  this  pipe  is  little,  if  any,  less  than  when  it 
was  put  down.  On  the  other  hand,  we  have  examined  a piece  of  pipe 
which  was  taken  out  of  the  system,  which  is  also  twenty-eight  years 
old,  on  which  there  are  considerable  tubercles.  This  piece  of  pipe 
was  in  the  early  days  on  a dead  end,  and  for  some  time  was  used 
to  only  a limited  extent,  although  now  considerable  quantities  of 
water  go  through  it.  The  fact  that  the  water  in  the  dead  end  was 
not  in  motion  enabled  the  deposits  to  form  easier  than  at  other 
places.  The  average  condition  of  the  pipes  is  somewhere  between 
these  two  extremes.  The  tuberculation  on  these  pipes  is  probably 
not  materially  different  from  the  average  of  pipe  throughout  the 
country. 

We  have  depreciated  the  pipe  lines  to  a greater  extent  than  would 
be  justified  on  the  theory  of  reduced  capacity  alone,  because  we  realize 
that  due  to  strengthening  of  the  distribution  systems  which  is  required 
from  time  to  time  as  cities  grow,  there  is  always  a small  percentage  of 
the  pipes  which  are  either  taken  up  and  replaced  by  larger  mains  or 
duplicated.  While  the  amount  of  pipe  affected  by  such  changes  as 
might  now  be  reasonably  made  in  Durham  is  small,  we  have  made 
allowance  for  it.  We  have  also  depreciated  some  lines  which  are 
unnecessarily  in  duplicate,  as  the  two  pipes  could  be  replaced  by  one 
larger  one  at  a smaller  cost. 

We  may  call  attention  to  the  fact  that  the  pipes  in  the  streets  of 
Durham  which  have  been  laid  for  some  years  occupy  a position  of 
assured  stability  and  have  been  thoroughly  tested  under  actual  service 
conditions  and  in  that  way  are  better  than  pipes  just  laid.  Deprecia- 
tion has  been  allowed  for  gates,  specials,  cutting  and  replacing  paving 
on  the  same  basis  as  the  pipe  in  or  over  which  they  are  laid. 

In  depreciating  machinery  and  other  structures,  we  have  given  due 
consideration  to  functional  depreciation  (that  is,  where  the  machinery 
or  structure  is  of  a type  not  as  well  adapted  to  the  service  it  is 
rendering  as  other  types  of  machinery  now  available  would  be,  we 
have  depreciated  its  value  for  that  reason.) 


Durham  Water  Company 


25 


We  have  not  allowed  depreciation  on  structures  which  are  of 
permanent  construction  and  are  fully  useful.  We  consider  dams 
and  reservoirs  under  this  class. 

The  Nancy  Rhodes  pond  has  been  depreciated  because  it  has  been 
gradually  filling  up.  We  have  taken  a depreciated  cost  based  on  a 
low  estimate  of  the  original  cost  of  this  pond  and  on  the  cost  of 
removing  the  sediment  now  in  it  and  obtaining  a storage  capacity 
equal  to  the  original  capacity.  Nancy  Rhodes  pond  has  served  a 
very  useful  purpose  to  the  company  and  will  continue  to  be  useful 
as  a coagulating  basin  so  long  as  the  plant  is  used.  This  large 
reservoir  is  more  useful  than  any  smaller  reservoir  which  could  be 
built  in  another  location  for  the  same  cost.  It  is  worth  more  than 
the  depreciated  value  allowed.  No  additional  claim  has,  however, 
been  made  on  this  account.  If  it  were  desired  to  have  the  original 
storage  which  was  available  on  Nancy  Rhodes  pond,  it  could  be 
obtained  by  removing  the  sediment  in  it.  Similar  basins  are  used  at 
other  plants  and  are  cleaned  out  from  time  to  time  as  the  additional 
capacity  is  needed.  The  deposit  in  such  basins  is  light  and  is  easily 
removed  by  pumps  at  small  cost.  A few  thousand  dollars  will  suffice 
to  excavate  this  basin  to  its  original  capacity  and  this  can  be  done 
by  the  company  whenever  it  is  thought  desirable. 

The  distribution  reservoir  is  worth  more  to  this  system  or  to  any 
system  for  water  works  in  Durham  than  it  cost.  We  have  given  no 
depreciation  on  this  structure,  (except  a small  amount  on  the  fence) 
because  it  is  as  good  now  as  it  was  when  it  was  built. 

INVENTORY 

The  inventories  of  the  various  items  of  the  property  which  make 
up  the  plant  were  made  under  the  direction  of  our  office.  Mr.  Chester 
M.  Everett,  a member  of  the  firm,  was  in  charge  of  the  work.  A 
thorough  inspection  of  the  property  and  an  examination  of  the  records 
of  the  company  was  made,  and  every  effort  made  to  get  the  inventory 
as  complete  as  possible.  In  obtaining  the  inventory  for  the  plant 
at  Eno  River  and  of  the  distribution  reservoir,  Mr.  C.  E.  Bosch,  rep- 
resenting Mr.  Gilbert  C.  White,  co-operated  with  Mr.  Everett.  Mr. 
W.  M.  Piatt,  who  was  employed  by  the  company  for  the  purpose, 
measured  the  streets  to  ascertain  the  actual  length  of  pipe  in  the 
ground.  Schedules  of  the  gates  and  of  other  appurtenances  were 
obtained  from  actual  inspection.  The  schedules  thus  made  up  were 
checked  from  the  records  of  the  company  and  by  employees  of  the 
company  who  were  familiar  with  the  system.  During  the  confer- 
ences with  Mr.  White  the  company  offered  to  uncover  pipes  in  the 
distribution  system  at  twenty  different  places,  to  be  selected  by  Mr. 
White,  in  order  to  establish  the  accuracy  of  the  schedules.  It  also 
offered  to  cut  out  pieces  of  pipe  from  the  distribution  system  at 


26 


Durham  Water  Company 


any  points  which  Mr.  White  might  select  in  order  to  show  the  actual 
condition  of  the  pipe  in  the  system.  These  offers  were  not  accepted 
by  Mr.  White. 

In  the  valuation  of  the  property  we  have  included  $13,986  as  the 
value  of  the  materials  and  supplies  on  hand.  The  inventory  for 
these  items  was  made  by  the  company.  We  have  used  the  amount  fur- 
nished us  without  checking  it,  as  the  items  which  go  to  make  up  this 
inventory  will  be  different  at  the  time  the  plant  is  taken  over  and  it  is 
likely  that  a new  inventory  will  be  necessary  at  that  time. 

CONCLUSIONS 

The  Durham  Water  Company  was  started  in  1886  and  we  under- 
stand first  served  the  city  with  water  in  1887.  Since  that  time,  or 
for  a period  of  twenty-nine  years,  the  company  has  continued  to 
supply  the  city.  During  the  early  years  Durham  was  a small  place. 
The  records  of  the  company  clearly  indicate  that  for  many  years  the 
water  works  did  not  earn  enough  to  make  any  considerable  return  on 
the  capital  invested.  The  city  has  grown  rapidly  and  the  company  has 
enlarged  and  improved  its  plant  to  meet  the  increased  consumption  of 
water..  It  has  to  a large  extent  put  its  earnings  into  increased  plant. 
If  a fair  value  is  now  obtained  for  the  Durham  Water  Company’s 
plant,  it  will  allow  a return  of  the  original  investment,  together  with 
a moderate  interest  on  it  for  the  full  period  during  which  this  capital 
has  been  used  to  serve  the  public. 

The  early  years  of  a water  works  company  are  always  full  of 
difficulties,  and  it  is  seldom  that  adequate  returns  are  obtained  dur- 
ing them.  Unless  a fair  return  in  later  years  is  secured  or  a fair 
value  of  the  plant  is  obtained  in  case  of  purchase,  the  investors  in 
water  works  properties  are  not  fairly  compensated.  It  should  be  recog- 
nized that  those  who  build  and  operate  public  utilities  companies  with 
all  the  attendant  risks  and  troubles,  and  who  devote  their  time  and 
attention  to  the  business  are  entitled  to  reasonable  pay  for  their 
services  and  for  the  capital  invested.  Unless  a fair  value  is  paid  to 
the  Durham  Water  Company  if  will  have  carried  the  business  during 
the  unprofitable  years  during  which  the  city  was  building  up,  and  be 
deprived  of  the  rights  to  operate  the  business  when  it  becomes  reas- 
onably profitable.  It  should  be  remembered  that  the  City  of  Durham 
could  not  have  been  built  up  to  its  present  size  and  importance  without 
a water  supply  and  it  is  clearly  but  just  that  the  capital  used  for  the 
benefit  of  the  city  should  be  returned  with  a fair  interest. 

Under  the  existing  conditions,  our  judgment  is  that  the  fair  value 
of  the  plant  as  of  January  1,  1916,  as  between  a willing  buyer  and  a 
willing  seller,  is  $589,000.  This  value  is  a conservative  one.  The 
seller  gets  the  return  of  the  capital  he  has  invested,  together  with  a 
moderate  interest  thereon,  while  the  buyer  gets  a going  business  which 


Durham  Water  Company 


27 


will  render  an  adequate  return  on  its  value  at  the  present  time  after  all 
necessary  improvements  have  been  made,  and  which  is  capable  of 
being  further  developed  so  that  it  will  render  a greater  return  in  the 
future. 

We  consider  this  a fair  value  of  the  plant  as  a going  concern  with 
all  its  business  and  rights. 

Respectfully  submitted, 

HAZEN,  WHIPPLE  & FULLER, 

By  Weston  E.  Fueler. 


T-l 


Durham  Water  Company 


ESTIMATED  COST  OF  REPRODUCTION  OF  PHYSICAL 
PLANT,  AND  ESTIMATED  DEPRECIATION 
THEREON 


ITEM 

Eno  River  Peant  : 

Power  dam  

Nancy  Rhodes  Pond  

Buildings  

Equipment  

Filters  

Distribution  reservoir  ....... 

Supply  and  force  mains  

Distribution  System  and 
Misceeeaneous  Piping: 

Cast  iron  pipe,  etc., 

Wrought  iron  pipe,  etc.,... 

Hydrants  

Meters  

Meter  boxes  

Fire  Station  

Telephone  Line  

Sum 

Engineering  and  contingen- 
cies, 12 l/2°/o  


Interest  on  construction,  6%.. 


Land  $14,000 

5%  overhead  700 


$14,700 

Interest  12%  1,764 


Total  estimated  cost  of  re- 
production of  physical 

plant  

Supplies  and  materials  on 
hand,  as  per  company’s 

inventory  

Going  Value  


Estimated  Approxi 
Sup-  cost  to  mate 

porting  build  at  average 

schedule,  present  age, 

page  time  years 

Depre- 

ciation 

Cost 
to  build 
less 
depre- 
ciation 

T-2 

$ 3,120 

28 

$ 200 

$ 2,920 

T-2 

6,560 

28 

2,560 

4,000 

T-2 

19,704 

13 

6,024 

13,680 

T-2-3 

44,014 

6.2 

11,574 

32,440 

T-3 

13,150 

17 

7,250 

5,900 

T-4 

16,000 

28 

100 

15,900 

T-5 

107,838 

19.2 

10,350 

97,488 

T-6 

$192,243 

14.8 

$15,226 

$177,017 

T-6 

18,383 

6.3 

2,716 

15,667 

T-6 

7,423 

13.5 

1,477 

5,946 

T-6 

19,076 

8.9 

4,883 

14,193 

T-6 

2,343 

8.5 

476 

1,867 

T-12 

7,820 

18 

6,820 

1,000 

T-12 

815 

5 

200 

615 

$458,489 

$69,856 

$388,633 

57,311 

8,732 

48,579 

$515,800 

$78,588 

$437,212 

30,948 

4,715 

26,233 

$546,748 

$83,303 

$463,445 

16,464 

0 

16,464 

$563,212 

$83,303 

$479,909 

13.986 

T-32  85.750 


Franchise  Value 


T-38 


$579,645 

9,638 


Durham  Water  Company 


T-2 


ESTIMATED  COST  OF  REPRODUCTION  OF  ENO 
RIVER  PLANT 


Sup- 

ITEM  porting 

Estimat- 
ed cost 
to  build 

DEPRECIATION 

Cost 
to  build 
less 

schedule, 

at  pres- 

Age, 

Total 

Total 

deprecia- 

page 

ent  time 

years 

per  cent 

amount 

tion 

Power  dam  

T-14 

$3,030 

28 

6.6 

$ 200 

$2,830 

Excavation,  tail  race... 

T-14 

90 

28 

0 

0 

90 

Nancy  Rhodes  Pond. . . 

T-14 

6,560 

28 

39 

2,560 

4,000 

Buildings  : 

Water  power  house. 

T-15 

3,900 

18 

42.35 

1,652 

2,248 

Filter  house  

T-15 

4,963  Av.16 

49.57 

2,460 

2,503 

Pumping  st.  house.. 

T-15 

7,141 

Av.10 

18.93 

1,351 

5.790 

Dwelling  

T-15 

1,200 

23 

34.30 

411 

789 

Club  house  

T-15 

500 

10 

19 

95 

405 

Alum  shed  

T-15 

100 

2 

3 

3 

97 

Office  building  

T-15 

50 

2 

3 

2 

48 

Oil  house  

T-15 

150 

2 

3 

5 

145 

Chemical  house  .... 

T-15 

100 

2 

3 

3 

97 

Dwelling  

T-15 

1,600 

3 

2.61 

42 

1,558 

Sum . ■. 

$19,704 

$6,024 

$13,680 

Equipment  : 
Water  Power  : 

1 35"  Leffel  Wheel.. 

T-16 

2,465 

15 

32.5 

800 

1,665 

1 15"  Holyoke  Wheel 

T-16 

825 

9 

16.6 

137 

688 

1 Bethlehem  power 

pump  

T-16 

2,992 

10 

60 

1,792 

1,200 

Steam  Equipment  : 

Corliss  engine  

T-16 

2,057 

9 

30 

617 

1,440 

Beth’m  power  pump. 

T-16 

3,488 

6 

30 

1,046 

2,442 

Beth’m  power  pump. 

T-16 

2,942 

10 

30 

882 

2,060 

Blake  pump  

T-17 

1,840 

17 

78.2 

1,440 

400 

Dean  pump  

T-17 

1,000 

100 

1,000 

0 

Platt  pump,  high  lift 

T-17 

6,065 

2 

3.09 

188 

5,877 

Ball  engine  

T-17 

590 

10 

50 

295 

295 

Worthington  pump.. 

T-17 

210 

3 

4.75 

10 

200 

Platt  pump,  low  lift. 

T-17 

1,375 

2 

6.20 

85 

1,290 

Boilers  : 

66  x 16  fire  tube. . . . 

T-17 

1,400 

10 

38 

535 

865 

66  x 18  fire  tube. . . . 

T-17 

1,650 

17 

78.4 

1,350 

300 

78  x 20  fire  tube. . . . 

T-17 

2,400 

2 

6.2 

150 

2,250 

78  x 20  fire  tube. . . . 

T-17 

2,450 

1 

3 

75 

2,375 

T-3 


Durham  Water  Company 


ESTIMATED  COST  OF  REPRODUCTION  OF  ENO  RIVER 
PLANT — Continued 


Sup- 

ITEM  porting 

Estimat- 
ed cost 
to  build 

depreciation 

Cost 
to  build 
less 

Schedule, 

at  pres- 

Age, 

Total 

Total 

deprecia- 

page 

ent  time 

years 

per  cent 

amount 

tion 

Webster  feed  water 

heater  

T-18 

410 

2 

6.2 

25 

385 

Coil  feed  water  h’r.. 

T-18 

150 

17 

78 

117 

33 

Worth’n  feed  pump. 

T-18 

125 

10 

26.36 

33 

92 

Worth’n  feed  pump. 

T-18 

100 

2 

4.3 

4 

96 

Traps  

T-18 

75 

2 

9.5 

7 

68 

Separators  

T-18 

500 

2 

4.3 

22 

478 

24"  Pelton  wheel 

T-18 

305 

12 

2.4 

73 

232 

12"  Pelton  wheel 

T-18 

70 

8 

14.4 

10 

60 

3 K.  W.  generator 

T-18 

96 

2 

4.3 

4 

92 

2 K.  W.  generator 

T-18 

75 

8 

20 

15 

60 

Oil  filters  

T-18 

40 

5 

16.7 

7 

33 

Recording  gauge  

T-18 

40 

8 

20 

8 

32 

Stoves  

T-18 

60 

5 

43.94 

26 

34 

Pyrene  fire  extinguishers 

T-18 

21 

2 

16.3 

3 

18 

Badger  fire  extinguish’r 

T-18 

100 

5 

43.94 

44 

56 

Electric  light  system . . . 

T-19 

150 

8 

14.4 

22 

128 

Plumbing  system  

T-19 

200 

10 

19 

38 

162 

Steam  and  Water  Piping  : 
Old  piping  T-19 

1,724 

10 

26 

455 

1,269 

New  piping  

T-19 

6,024 

2 

4.3 

259 

5,765 

Sum 

$44,014 

$11,574 

$32,440 

Filters : 

2 250,000  gallon  units 

T-19 

5,500 

21 

75 

4,120 

1,380 

3 350,000  gallon  units 

T-19 

7,650 

14 

41 

3,130 

4,520 

Sum 


$13,150 


$7,250  $5,900 


Durham  Water  Company 


T-4 


ESTIMATED  COST  OF  REPRODUCTION  OF  DISTRIBUTION 

RESERVOIR 


Estimated 

cost 

ITEM  to  build  at 

present 
time 

Distribution  Reservoir  : 

200  feet  in  diameter, 

15  feet  deep,  capacity 
3.5  million  gallons  to 
top 

1,200  cu.  yds.  rock 


excavation,  at  $1 $ 1,200 

5,100  cu.  yds.  earth 
excavation,  at  40  cents..  2,040 

Masonry  wall,  2 feet 
at  top,  5 feet  at  bot- 
tom 18  feet  high;  1,- 
470  cu.  yds.  at  $8.40....  12,325 

700  lineal  feet  of 

fence,  at  30  cents 210 

Concrete  steps  25 

Building,  15'  x 15' 200 

Total  estimated  cost  of 

reproduction  $16,000 


Cost 

DEPRECIATION  to  build 
less 

Age,  Total  Total  deprecia- 
years  per  cent  Amount  tion 


28 


0.6 


100 


$15,900 


T-5 


Durham  Water  Company 


ESTIMATED  COST  OF  REPRODUCTION  OF  SUPPLY  AND 
FORCE  MAINS 

(Supporting  Schedule  for  Pipe  Laying,  T-20) 

Estimated  Cost 

Cost  Depreciation  to  build 

ITEM  to  build  at  less 

present  Age,  Total  Total  deprecia- 
ting years  per  cent  amount  tion 

12"  Pipe;  Line;,  River  to 
Reservoir  : 

8,504  ft.  pipe,  @ $1.44..  $12,246 


Extra  for  rock,  935 

1 manhole  25 

10  air  valves,  @ $4  . . . . 40 

1,926  lbs.  spec.,  @ 3 cts.  58 

1 12"  gate,  @ $12....  36 

13  valve  boxes,  @ $2.75  36 

1 12  x 4 Smith  connect’n  20  $13,396  29  17.63  $2,360  $11,036 

12"  Line,  River  to 

Reservoir  : 

8,526  ft.  pipe,  @ $1.44..  $12,277 
Extra  for  rock  935 

16  ft.  4"  pipe,  @ 54  cts.  9 

2 air  valves,  @ $4 8 

1 12"  check  valve 60 

1,133  lbs.  spec.,  @ 3 cts.  34 

1 4"  gate,  7 

4 12"  gates,  @ $37....  148 

17  valve  boxes,  @ $2.75  47 

1 12  x 4 Smith  Con’s..  20  13,545  6 1.93  270  13,275 

12"  Line,  Reservoir 
to  City  : 

17,248  ft.  pipe,  @ $1.44  $24,837 
Extra  for  rock 900 

12  ft.  4"  pipe,  @ 54  cts.  6 

7 air  valves,  @ $4 28 

2,346  lbs.  spec.,  @ 3 cts.  70 

1 4"  gate,  7 

1 6"  gate,  12 

4 12"  gates,  @ $37....  148 

13  valve  boxes,  @ $2.75  36 

1 12  x 2 Smith  con’s..  8 

1 12  x 4 Smith  con’s..  20 

Extra  for  crossing  ....  700  26,772  29  17.63  4.720  22,052 


Durham  Water  Company 


T-5a 


ESTIMATED  COST  OF  REPRODUCTION  OF  SUPPLY  AND 
FORCE  MAINS — Continued 

(Supporting  Schedule  for  Pipe  Laying,  T-20) 

Estimated  Cost 

Cost  Depreciation  to  build 

ITEM  to  build  at  less 

present  Age,  Total  Total  deprecia- 
ting years  per  cent  Amount  tion 

20"  Line,  Reservoir  to  City  : 

17,083  ft.  pipe,  @ $2.91  $49,711 


Extra  for  rock,  2,000 

Extra  for  crossing  ....  1,300 

42  ft  4",  @ 54  cts 22 

110  ft.  12”,  @ $1.44....  158 

8 air  valve§,  @ $4 32 

4,451  lbs.  spec.,  @ 3 cts.  133 
3 4"  gates,  @ $7.50. . . 23 

1 6"  gate  12 

1 12”  gate,  37 

5 20"  gates,  @ $125. . . . 625 

19  valve  boxes,  @ $2.75  52 

1 12  x 4 Smith  con’s..  20  54,125  14  5.54  3,000  51,125 


Total 


$107,838 


$97,488 


T-6 


Durham  Water  Company 


SUMMARY  OF  ESTIMATED  COST  OF  REPRODUCTION  OF 
DISTRIBUTION  SYSTEM 

Estimated  Cost 


ITEM 

Sup-  cost  to 
porting-  build  at 
schedule,  present 
page  time 

DEPRECIATION 

Age , Total  Total 
years  per  ct.  amount 

to  build 
less 

deprecia- 

tion 

Cast  iron  pipe  

. T-  7 $154,278 

Gates  

. T-  7 

5,484 

Specials  

. T-  7 

3,132 

Valve  boxes  

. T-  7 

1,378 

Smith  connections  

Check  valves,  flange  spec- 

. T-  8 

1,677 

ials  and  manhole, 

Additional  cost  of  laying 

. T-  8 

606 

mains  under  paving. . . 

. T-  9 

25,688 

Sum 

$192,243 

14.8  7.9 

$15,226 

$177,017 

Wrought  iron  pipe 

. T-  9 $ 17,107 

Stops,  lead  connections,  etc.  T-  9 

994 

Curb  boxes  

. T-  9 

70 

Mueller  connections  

. T-10 

212 

Sum 

$18,383 

6.3  14.7 

$2,716 

$15,667 

Hydrants  

. T-10 

7,423 

13.5  19.9 

1,477 

5,946 

Meters  

. T-10 

19,076 

8.9  25.6 

4,883 

14,193 

Meter  boxes  

. T-ll 

2,343 

8.5  20.3 

476 

1,867 

Total  estimated  cost  of 

reproduction  of  distri- 
bution system  

$239,468 

13.6  10.3 

$24,778 

$214,690 

Durham  Water  Company 


T-7 


ESTIMATED  COST  OF  REPRODUCTION  OF  DISTRIBU- 
TION SYSTEM 


CAST  IRON  PIPES 


Size  of 

Supporting 

length 

Cost 

pipe, 

schedule 

in 

per 

inches 

page 

feet 

foot 

Total 

4 

T-21,  22 

12,663 

$ .48 

$ 6,078 

6 

T-21,  22 

122,292 

.68 

83,159 

8 

T-21, 22 

18,833 

.90 

16,950 

10 

T-21, 22 

3,254 

1.18 

3,840 

12 

T-21,  22 

12,828 

1.48 

18,985 

14 

T-21,  22 

3,443 

1.82 

6,266 

16 

T-21,  22 

2,572 

2.20 

5,658 

18 

T-21,  22 

252 

2.58 

650 

20 

T-21,  22 

4,259 

2.98 

12,692 

$180,396 

$154,278 

GATE  VALVES 


Size 


of  gates 

4 

T-24 

Number 

71 

$ 7.5C 

$ 533 

6 

T-24 

198 

12.00 

2,376 

8 

T-24 

37 

18.50 

685 

10 

T-24 

12 

26.50 

318 

12 

T-24 

22 

37.00 

814 

14 

T-24 

7 

48.00 

336 

16 

T-24 

3 

65.00 

195 

18 

T-24 

1 

102.00 

102 

20 

T-24 

1 

125.00 

125 

352  $5,484 


SPECIALS 

111,863  pounds  T-23  per  pound,  $0,028  3,132 

VALVE  BOXES 

T-26  per  box,  $2.75  1,378 


501 


T-8 


Durham  Water  Company 


SMITH  CONNECTIONS 


.Size  of 
connec- 
tion 

Supporting 

schedule 

page 

Number 

Unit 

price 

Total 

20  x 

12  Cross 

T-25 

l 

$114.80 

$ 115 

20  x 

12  Tee 

T-25 

2 

69.30 

138 

20  x 

8 ” 

T-25 

4 

46.80 

187 

20  x 

6 ” 

T-25 

5 

39.20 

196 

20  x 

4 ” 

T-25 

1 

34.20 

34 

14  x 

12  ” 

T-25 

2 

57.70 

• 115 

12  x 

8 ” 

T-25 

4 

34.40 

137 

12  x 

6 ” 

T-25 

5 

26.80 

134 

12  x 

4 ” 

T-25 

1 

21.60 

22 

12  x 

2 ” 

T-25 

1 

8.00 

8 

10  x 

6 ” 

T-25 

2 

23.60 

47 

10  x 

4 ” 

T-25 

1 

18.40 

18 

8 x 

8 ” 

T-25 

1 

28.80 

29 

8 x 

6 ” 

T-25 

2 

21.00 

42 

8 x 

4 ” 

T-25 

8 

15.70 

126 

8 x 

2 ” 

T-25 

1 

8.00 

8 

6 x 

6 ” 

T-25 

4 

18.90 

76 

6 x 

4 ” 

T-25 

8 

13.60 

109 

6 x 

2 ” 

T-25 

15 

8.00 

120 

4 x 

2 ” 

T-25 

2 

8.00 

16 

$1,677 

CHECK  VALVES 

18  1 $200  200 

12  1 54  54 

8 2 24  48 


$302 

MANHOLES 


1 manhole,  @ $25,  $ 25 

I BEAMS 

3 8-inch  I-beams,  @ $7,  $21 


FLANGE  SPECIALS 
6,434  pounds  flange  specials,  @ 4 cents 


$258 


Durham  Water  Company 


T-9 


ADDITIONAL  COST  OF  LAYING  MAINS  UNDER  PAVING 


PAVING 


Length 

Supporting 

Cost  per 

in 

schedule 

foot  of 

feet 

page 

Description 

trench 

Total 

98,090 

T-24 

Macadam, 

$ .16 

$15,694 

24,537 

T-24 

Bit.  macadam, 

.32 

7,852 

2,901 

T-24 

Brick  on  sand, 

.33 

957 

902 

T-24 

Belgian  block, 

.58 

523 

1,140 

T-24 

Asphalt 

.58 

662 

127,570 

$25,688 

WROUGHT  IRON  PIPE 

Length  in 

feet 

H 

17,616 

.14 

$ 2,466 

l 

40,085 

.15 

6,013 

11,485 

.19 

2,182 

2 

29,299 

.22 

6,446 

98,485 

$17,107 

STOPS,  LEAD  CONNECTIONS  AND  CORPORATION  COCKS 


Size 

in 

Supporting 

schedule, 

Unit 

inches 

page 

Description 

Number 

price 

Total 

% 

T-26 

Stops, 

20 

$ .30 

$ 6 

1 

T-26 

Stops, 

93 

.80 

74 

V6 

T-26 

Stops, 

21 

3.00 

63 

2 

T-26 

Stops, 

52 

5.00 

260 

A 

T-26 

Lead  connections 

34 

3.50 

119 

l 

T-26 

Lead  connections, 

68 

4.50 

306 

H 

T-26 

Corporation  cocks. 

33 

.50 

17 

1 

T-26 

Corporation  cocks, 

180 

501 

.83 

149 

$994 

CURB  BOXES 

97  curb  boxes,  @ $0.72, $70 


T-10 


Durham  Water  Company 


MUELLER  CONNECTIONS 


Supporting 
ITEM  schedule, 

page 

Number 

Unit 

price 

Total 

4- way,  T-25 

22 

$8.00 

$176 

3-way,  T-25 

4 

5.50 

22 

2-way,  T-25 

4 

3.50 

14 

HYDRANTS 

Supporting 

ITEM  schedule, 

page  Number 

Unit 

price 

$212 

Total 

Corey  steamers 

T-28 

2 

$26.50 

$ 53 

Darling  steamers 

T-28 

19 

30.50 

580 

4"  Glamorgan  

T-28 

110 

28.25 

3,108 

6"  Glamorgan  

T-28 

7 

28.50 

200 

Glamorgan  steamers .... 

T-28 

4 

30.75 

123 

Glamorgan  sprinklers.. 

T-28 

5 

23.50 

117 

4"  Columbian  

T-28 

2 

26.50 

53 

6"  Columbian  

T-28 

3 

28.95 

87 

4"  Smith  

T-28 

7 

25.00 

175 

6"  Smith  

T-28 

6 

27.00 

162 

Smith  steamers 

T-28 

18 

27.00 

486 

4"  Coffin  

T-28 

83 

26.50 

2,200 

4"  Matthews  . .' 

T-28 

3 

26.50 

79 

METERS 

, SET,  WITHOUT  BOXES 

$7,423 

y2"  Hersey  

T-29 

1 

$11.25 

$ 11 

Y"  Hersey  

T-29 

146 

11.25 

1,642 

54"  Crown  

T-29 

427 

14.60 

6,234 

1"  Crown  

T-29 

8 

31.50 

252 

1/4"  Crown  

T-29 

2 

49.00 

98 

2"  Crown  

T-29 

7 

65.00 

455 

3"  Crown  

T-29 

1 

132.80 

133 

54"  Empire  

T-29 

65 

11.25 

731 

6"  Empire  compound  . . . 

T-29 

1 

428.65 

429 

54”  Neptune  

T-29 

14 

11.25 

158 

54”  Lambert  

T-29 

711  • 

11.25 

7,999 

1"  Lambert  

T-29 

18 

19.00 

342 

1 J4"  Lambert  

T-29 

1 

31.00 

31 

2"  Lambert  

T-29 

8 

50.00 

400 

54"  Worthington  

T-29 

1 

8.65 

9 

1"  Worthington  

T-29 

4 

15.40 

62 

54"  Gamon  

T-29 

9 

10.00 

90 

$19,076 


Durham  Water  Company 


T-ll 


METER  BOXES 


Number 

Description 

Unit 

price 

Total 

916 

Kerr’s  Foundry 

$ .50 

$ 458 

293 

Glamorgan 

3.80 

1,112 

189 

Griffin  Foundry 

2.00 

378 

9 

Cooks  Machine 

works 

2.00 

18 

21 

Brick  manholes, 

iron  covers 

17.00 

357 

2 

Brick  manholes, 

wood  covers 

10.00 

20 

1,430 


$2,343 


T-12 


Durham  Water  Company 


ESTIMATED  COST  OF  REPRODUCTION  OF  FIRE  PUMP  AND 
RESERVOIR  AT  DUKE’S  FACTORY 

Reservoir  : 

14  feet  deep,  SO  feet  in  diameter,  capacity,  206,000 
gallons. 

Excavation,  1,100  cubic  yards,  @ 40  cents $ 440 

Masonry,  180  cubic  yards,  @ $8.00 1,440  $1,880 

Pump  : 

1 3.6-million  gallon,  horizontal  compound  duplex 
pump,  against  125  pounds,  183  water  horse 

power,  @ $30.00  $5,490 

Erection  300 

Foundations  150  $5,940 

Total  estimated  cost  of  reproduction $7,820 

ESTIMATED  COST  OF  REPRODUCTION  OF  TELEPHONE 

LINE 

Length,  Sy2  Miees 

290  poles,  @ $2.00 $580.00 

290  holes,  @ $0.15  43.50 

Setting  poles,  @ 30  cents 87.00 

Insulators  and  brackets  r..  10.00 

No.  12  galvanized  wire  41.40 

Erecting  wire  54.00 


Total  estimated  cost  of  reproduction $815.90 


Durham  Water  Company  T-13 


ESTIMATED  ORIGINAL  COST  OF  LAND,  WATER  RIGHTS 
AND  EASEMENTS 

33  acres  land  alone,  at  plant  $1,850 

10  acres  at  Cole’s  Mill,  including  flowage  rights....  3,500 

For  reservoir  500 

Water  rights,  including  damages,  etc.,  5,150 

Easements  on  pipe  lines 3,000 


Total  estimated  actual  cost  of  land,  water  rights 

and  easements  $14,000 


T-14 


Durham  Water  Company 


ESTIMATED  COST  OF  REPRODUCTION,  ENO  RIVER  PLANT 


Description 

Power  Dam  : 

Rock  excavation,  1,200  cu. 

yds.,  @ $1  

Masonry  walls,  148  cu.  yds., 

@ $8  

Rock  fill,  326  cu.  yds.,  @ 75c. 
Timber,  oak,  8,000  BM,  @ $50 
Tail  Race  : 

Rock  excavation,  90  cu.  yds., 
@ $1  


Cost  to 

Depreciation  Build 
Cost  to  less 

reproduce  Age,  Total  Total  deprecia- 
new  yrs.  per  ct.  amt.  tion 


$1,200 

1,185 

245 

400  $3,030  28  6.6  $200  $2,830 


90  28  0 90 


Nancy  Rhodes  Pond  : 

6 million  gals.  cap. 

Dam : Masonry  walls,  353 

cu.  yds.,  @ $8 $2,824 

Earth  embankment,  1,865  cu. 

yds.,  @ 40  cts 746 

Timber,  oak,  4,500  BM.  @ $50  225 

Clearing  site  50 

Screens  and  foot  bridge 100 

$3,945 

Road  Crossing  on  Emb: 

Masonry,  57  cu.  yds.,  @ $8...  $ 456 
Earth  embankment,  410  cu. 

yds.,  @ 40  cts 164 

Timber,  800  BM,  @ $50 40 

$ 660 

Canal  West  Side  oe  Pond  : 

Masonry,  66  cu.  yds.,  con- 
crete, @ $8  $ 528 

Rock  excavation,  1,011  cu. 

yds.,  @ $1  1,011 

Earth  excavation,  530  cu. 

yds.,  @ 30  cts 160 


Canal,  East  Side  : 

Rock  excavation,  196  cu. 

yds.,  @ $1  196 

Earth  excavation,  196  cu. 

yds.,  @ 30  cts 60 


$1,955  $6,560  28  39  $2,560  $4,000 


Durham  Water  Company 


T-15 


ESTIMATED  COST  OF  REPRODUCTION  OF  ENO  RIVER 
PLANT — Continued 


Cost  to 

Depreciation  Build 

Description  Cost  to  less 

reproduce  Age,  Total  Total  deprecia- 
new  yrs.  per  ct.  amt.  tion 

Structures  : Buildings  : 

Water  power  house : Super- 
structure, frame,  22,300 
cu.  ft.,  @ 6 cts.,  1,488  sq.  ft.  $1,338 


Foundations  : Rock  excava- 
tion, 367  cu.  yds.,  @ $1.50 
Earth  excavation,  40  cu.  yds. 

@ 30  cts 

Masonry,  250  cu.  yds.;  @ $8.. 


550 

12 

2,000  $3,900  18  42.35  $1,652  $2,248 


Filter  house:  Superstruc- 

ture frame,  71,000  cu.  ft., 

@ 6 cts.,  3,850  sq.  ft 4,260 

Foundations:  Earth  excava- 
tion, 425  cu.  yds.,  @ 30c...  127 

Masonry  concrete,  72  cu. 

yds.,  @ $8  576  $4,963  16  49.57  $2,460  $2,503 

Pumping  station  building : 

Superstructure,  galvaniz- 
ed iron  on  frame,  100,- 

000  cu.  ft.,  @ 5 cts $5,000 

Foundations : Rock  excava- 
tion, 100  cu.  yds.,  @ $1...  100 

Earth  excavation,  750  cu. 

yds.,  @ 30  cts 225 


Masonry  foundation  and 
walls  exclusive  of  pump 
foundations,  227  cu.  yds., 


@ $8  

$1,816  $7,141 

10 

18.93  $1,351 

$5,790 

1 dwelling  house 

$1,200  23  34.30$ 

411 

$ 789 

1 house  

500 

10 

19 

95 

405 

1 alum  shed  

100 

2 

3 

3 

97 

1 office  building  

50 

2 

3 

2 

48 

1 oil  house  

150 

2 

3 

5 

145 

1 chemical  house  

100 

2 

3 

3 

97 

King’s  house  

1,600 

3 

2.61 

42 

1,558 

T-16 


Durham  Water  Company 


ESTIMATED  COST  OF  REPRODUCTION  OF  ENO  RIVER 
PEANT — Continued 


Cost  to 

Depreciation  Build 

Description  Cost  to  less 

reproduce  Age  Total  Total  deprecia- 
new  yrs.  per  ct.  amt.  tion 

Equipment  : 

Water  Power : 

1-35"  Leffel  vertical  water 
wheel  with  flumes,  no 


governor  

$1,365 

Head  gates,  trash  racks, 

hauling  and  erection 

1-15"  Holyoke  vertical  wheel 

$1,100 

$2,465 

15  32.5  $ 800 

$1,665 

and  pump 

$ 775 

Hauling  and  erection  

1-9M?  x 18  Bethlehem  power 

$ 50 

$ 825 

9 16.6  $ 137 

$ 688 

pump,  belt  driven,  capa- 
city 1.5  mil.  gals.,  

$2,253 

Hauling  and  erection  

425 

Belt  

274 

Oiling  system  

Steam  pumping  equipment : 
1-14  x 36  Corliss  engine, 

40 

$2,992 

10  60  $1,792 

$1,200 

driving  2 power  pumps.. 

$1,237 

Bearings  and  shafting  

265 

Erection  

235 

Foundation  

1-10  x 20  duplex  single 

$ 320 

$2,057 

9 30  $ 617 

$1,440 

acting  Bethlehem  power 
pump,  capacity  2-14  mil- 
lion gallons  

$2,428 

Erection  

400 

Foundations  

120 

Belt  

400 

Oil  system  

40 

Air  chambers  

1 9l4  x 18  Duplex  single 

100 

$3,488 

6 30  $1,046 

$2,442 

acting  Bethlehem  power 
pump,  capacity  1.5  mil. 
gals 

$2,207 

Erection  and  hauling  

350 

Foundations  

96 

Belt  

249 

Oil  svstem  

40 

$2,942 

10  30  $ 882 

$2,060 

Durham  Water  Company 


T-17 


ESTIMATED  COST  OF  REPRODUCTION  OF  ENO  RIVER 
PLANT — Continued 


Cost  to 

Depreciation  Build 

Description  Cost  to  less 

reproduce  Age,  Total  Total  deprecia- 
new  yrs.  per  ct.  amt.  tion 

1 Blake,  horizontal  com- 
pound, 14  x 20  x 11  du- 
plex, capacity  1.5  million 


gals $1,500 

Erection  300 

Foundations  40  $1,840  17  78.2  $1,440  $ 400 

Dean  pump  $1,000  100.  $1,000  0 


1 Platt  horizontal  tandem, 
compound  duplex,  16  x 
26  x 16  x 24;  head  300 
feet,  capacity  3 MGD ; 
duty,  50  million,  with 
surface  condenser  circu- 
lating and  air  pump $5,385 

Erection  200 


Foundations  480  $6,065  2 3.09$  188  $5,877 

1 Ball  single  engine,  driv- 
ing Worthington  centri- 


fugal  pump  

Erection  

Foundations  

500 

50 

40 

$590  10  50 

$295 

$295 

1 8"  Class  D Worthington 

volute  pump  

Erection  

Foundation  

$ 150 
40 
20 

$210  3 4.75 

$10 

$200 

1 14"  Platt  Centrifugal 

pump,  direct  connected 
to  1 8 x 9 Fleming  en- 
gine, capacity  5 MGD. 
Head  35  ft.,  erected  

$1,375 

$1,375  2 6.2 

$85 

$1,290 

Boilers  : 

1 66  x 16,  100  H.  P„  F.  T. 
cost  set 

$1,400  10  38.0 

$ 535 

$ 865 

1 66  x 16,  125  H.  P„  F.  T... 

1,650  17  78.4 

1,350 

300 

1 78  x 20,  200  H.  P„  F.  T... 

2,400  2 6.2 

150 

2,250 

1 78  x 20,  200  H.  P.,  F.  T. 

with  steel  casing 

2,450  1 3.0 

75 

2,375 

T-18 


Durham  Water  Company 


ESTIMATED  COST  OF  REPRODUCTION  OF  ENO  RIVER 
PLANT — Continued 


Description 

1 Webster  vacuum  feed 
water  heater,  400  H.  P., 
with  10"  separator,  6" 
gate  valve,  and  1"  grease 
trap  

$ 360 

Cost  to 

Depreciation  Build 
Cost  to  less 

reproduce  Age  Total  Total  deprecia- 
new  yrs.  per  ct.  amt.  tion- 

Erection  

50 

$410  2 6.2 

$25 

$385 

1 coil  feed  water  heater 

16x4x6  Worthington 

150 

$150  17  78 

$117 

$33 

boiler  feed  pump,  erected 
1 514  x 3]/2  x 5 Worthing- 
ton boiler  feed  pump, 

$125  10  26.36 

$33 

$92 

erected  

$100  2 4.3 

4 

$96 

3 Anderson  traps,  @ $25 

75  2 9.5 

7 

68 

1 12"  steam  separator 

150  2 4.3 

7 

143 

1 10"  steam  separator,  @ $1 . . 

100  2 4.3 

4 

96 

1 3"  separator  receiver 

100  2 4.3 

4 

96 

1 5"  separator  receiver 

1 24"  Pelton  wheel, 

Hauling  and  setting  

$230 

40 

150  2 4.3 

7 

143 

Foundation  

1 12"  Pelton  wheel  

35 

50 

$305  12  24 

$73 

$232 

Setting  

1 3 KW  G.  E..  D.  C.  gener- 

20 

$70  8 14.4 

$10 

$60 

ator  

1 2 IvW  Holtzer  Cabot 

96  2 4.3 

4 

92 

Generator  

75  8 20 

15 

60 

1 5 gallon  oil  filter 

25  5 16.7 

4 

21 

1 3 gallon  oil  filter 

1 Bristol  recording  pressure 

15  5 16.7 

3 

12 

gauge  

40  8 20 

8 

32 

3 stoves,  @ $20  

3 Pyrene  fire  extinguishers, 

60  5 43.94 

26 

34 

@ $7  

4 Badger  fire  extinguishers, 

21  2 16.3 

3 

18 

@ $25  

100  5 43.94 

44 

56 

Durham  Water  Company 


T-19 


ESTIMATED  COST  OF  REPRODUCTION  OF  ENO  RIVER 
PLANT — Continued 


Description 

Electric  light  system,  includ- 

ing  outside  lines 

Plumbing  system  

Old  steam  and  water  piping 
and  fittings,  erected 
New  steam  and  water  piping 
and  fittings,  all  installed 
in  1913,  erected  

Filter  Plant  : 

3 250,000  gallon  units,  War- 
ren Gravity  wood  tub 
filters,  erected  in  place 
with  most  of  the  piping,. 

Extra  piping  

Part  of  the  erection  done 

by  company  

3 350,000  gallons  units,  same 
type,  erected  with  part 

of  piping  

Extra  piping  

Part  of  erection  done  by 

company  

Above  filters  include  wood- 
en coagulating  basin  and 
wooden  pure  well. 


Cost  to 
Depreciation  Build 
Cost  to  less 

reproduce  Ag’e,  Total  Total  deprecia- 


new 

yrs.  per  ct. 

amt. 

tion 

$150 

8 14.4 

22 

$128 

200 

10  19.0 

38 

162 

1,724 

10  26 

455 

1,269 

6,024 

2 4.3 

259 

5,765 

$4,500 

500 

500  $5,500  21  75  $4,120  $1,380 

$6,150 

750 

750  $7,650  14  41  $3,130  $4,520 


T-20 


Durham  Water  Company 


ESTIMATED  COST  OF  LAYING  PIPE  IN  FORCE  MAINS 


Size  of  pipe, 
inches 

12  in.  20  in. 

Width  of  trench  at  top,  feet 3.0  4.0 

Width  of  trench  at  bottom,  feet 2.5  3.5 

Depth  of  trench  in  feet 3.5  4.2 

Cubic  yards  per  foot  0.36  0.58 

Weight  of  pipe  per  ft.  class  B,  X 1.5%  for  overweight.  .83.4  177.6 

Weight  of  lead  in  one  joint,  pounds 20  40 

Cost  of  lead  joint  every  12  ft.,  in  cts.,  per  foot  of  pipe....  8.75  17.50 


Cost  per  Foot: 

Excavation  $ .13  $ .209 

Lead  09  .175 

Other  costs  .10  .18 


Cost  of  laying  $ .32  $ .564 

Hauling  .042  .088 

Cost  of  pipe  per  ton  For  12"  $25.75 

Cost  of  pipe  per  ton  For  20"  25.50 

Cost  per  foot  $1,074  $2,264 


$1,436  $2,916 

$1.44  $2.91 


Total 

Use 


Durham  Water  Company 


T-21 


ESTIMATED  COST  OF  LAYING  CAST  IRON  PIPE  IN 
DISTRIBUTION  SYSTEM 

SIZE  OF  PIPE.  IV  INCHES 


4 

Width  of  trench  at 

6 

8 

10 

12 

14 

16 

18 

20 

at  top,  feet....  2.5 
Width  of  trench  at 

2.5 

2.5 

2.7 

3.0 

3.2 

3.5 

3.7 

4.0 

bottom,  feet  . . 2.0 

Depth  of  trench  in 

2.0 

2.0 

2.2 

2.5 

2.7 

3.0 

3.2 

3.5 

feet  2.8 

3.0 

3.2 

3.3 

3.5 

3.7 

3.8 

4.0 

4.2 

Cubic  yards  per  ft.  0.23 
Weight  of  pipe  per 
ft.,  Class  B,  X 

0.25 

0.27 

0.31 

0.36 

0.41 

0.46 

0.52 

0.58 

1.5%  overweight  22. 

33.8 

48.2 

64.7 

83.4 

104. 

126.9 

152.2 

177.6 

Lead  in  joints,  lbs.  7. 
Cost  of  lead,  joints, 

11  ft.,  5i4  cts:, 
per  lb.,  in  cents 

10. 

13. 

16. 

20. 

24. 

32. 

35. 

40. 

per  foot  of  pipe  3.5 
Cost  per  foot  exca- 

5.0 

6.5 

8.0 

10.0 

12. 

16. 

17.5 

20. 

vation,  @ 40  cts.  0.090  0.100  0.108  0.124  0.144  0.164  0.184  0.208  0.232 


Lead  0.035  0.050  0.065  0.080  0.100  0.120  0.160  0.175  0.200 

Other  costs  0.03  0.05  0.06  0.08  0.10  0.12  0.14  0.16  0.18 

Cost  of  Laying. . . . 0.155  0.20  0.233  0.284  0.344  0.404  0.484  0.543  0.612 

Hauling  0.01  0.02  0.025  0.03  0.04  0.05  0.06  0.07  0.08 

Pipe  per  ton  26.50  26.00  26.00  26.00  25.75  25.75  25.75  25.50  25.50 

Cents  per  foot  of 

pipe  0.292  0.440  0.626  0.842  1.07  1.34  1.63  1.94  2.26 

Sum  0.46  0.66  0.88  1.156  1.45  1.79  2.17  2.55  2.95 


Add  for  city  con- 
ditions and  cros- 
sings   

Total  


0.02  0.02  0.02  0.025  0.03  0.03  0.03  0.03  0.03 

0.48  0.68  0.90  1.18  1.48  1.82  2.20  2.58  2.98 


T-22 


Durham  Water  Company 


Durham  Water  Company 


T-23 


ACTUAL  PRICES  PAID  BY  THE  DURHAM  WATER  COMPANY 
FOR  SPECIALS  AND  LEAD  DURING  THE  LAST  TEN  YEARS 


Prices  paid 

Average  price  per 

cents  per  pound 

pound  per  year  for 

Date 

Specials 

I^ead 

Specials  L,ead 

1906 

April  

2.9 

5.25 

June  

2.9 

September  

3.25 

6.3 

November  

7.0 

3.2  6.18 

1907 

March  

3.25 

7.25 

May  

3.25 

7.25 

July  

3.25 

7.5 

August  

3.25 

October  

6.50 

November  

3.25 

6.75 

December  

5.25 

3.25  6.75 

1908 

March  

2.9 

4.75 

April  

2.8 

4.75 

May  

2.75 

4.95 

September  

2.75 

5.25 

December  

5.00 

2.80  4.94 

1909 

April  

2.75 

5.00 

September  

2.75 

2.75  5.00 

1910 

April  

2.75 

5.00 

May  

2.75 

June  

5.00 

2.75  5.00 

1911 

April  

2.75 

5.10 

May  

4.90 

August  

2.75 

October  

2.75 

5.25 

2.75  5.08 

1912 

April  

2.75 

July  

2.50 

5.50 

September  

2.75 

5.50 

November  

2.75 

5.75 

2.69  5.50 

1913 

Tanuary  

2.65 

5.50 

February  

2.75 

March  

2.75 

May  

2.65 

2.70  5.50 

1914 

March  

5.00 

April  

2.75 

5.00 

October  

2.75 

4.75 

December  

4.75 

2.75  4.87 

1915 

January  

2.75 

5.00 

July  

2.75 

7.50 

August  

2.75 

6.5 

September  

2.75 

6.0 

2.75  6.25 

Average  for  ten  years. . . . 

2.82  5.507 

T-24 


Durham  Water  Company 


ACTUAL  AVERAGE  COST  TO  THE  WATER  COMPANY  OF 
GATES  BOUGHT  DURING  THE  LAST  10  YEARS, 

WITH  ESTIMTED  COST  OF  SETTING  . 

SIZE,  IN  INCHES 

4 6 8 10  12  14  16  18  20 

Average 

cost.... $7.00  $11.00  $17.00  $25.00  $35.00  $45.00  $60.00  $ 95.00  $115.00 
Setting  ..  .50  1.00  1.50  1.50  2.00  3.00  5.00  7.00  10.00 


Total  ....$7.50  $12.00  $18.50  $26.50  $37.00  $48.00  $65.00  $102.00  $125.00 


ESTIMATED  COST  OF  CUTTING  AND  REPLACING 
PAVEMENT 


BASED  ON  A WIDTH  OE  CUTTING  OE  3 FEET 


For  brick  on  sand @ $1.00 

For  asphalt  on  concrete.. @ $1.75 

For  macadam  @ $ .50 

For  bitumen  macadam.... @ $1.00 
For  stone  block @ $1.75 


per  sq.  yd.  $ .33  per  ft.  of  trench 

per  sq.  yd.  $ .58  per  ft.  of  trench 

per  sq.  yd.  $ .16  per  ft.  of  trench 

per  sq.  yd.  $ .32  per  ft.  of  trench 

per  sq.  yd.  $ .58  per  ft.  of  french 


Durham  Water  Company 


T-25 


ESTIMATED  COST  OF  REPLACING  SMITH  CONNECTIONS 
WITH  AN  EQUIVALENT  REGULAR  SPECIAL  AND 
GATE,  2"  CONNECTIONS  FIGURED  AS  TAPS 


Size 

Cost 

20 

X 

12 

cross 

$114.80 

20 

X 

12 

tee 

69.30 

20 

X 

8 

tee 

46.80 

20 

X 

6 

tee 

39.20 

20 

X 

4 

tee 

34.20 

14 

X 

12 

tee 

57.70 

12 

X 

8 

tee 

34.40 

12 

X 

6 

tee 

26.80 

12 

X 

4 

tee 

21.60 

12 

X 

2 

tee 

8.00 

10 

X 

6 

tee 

23.60 

10 

X 

4 

tee 

18.40 

8 

X 

8 

tee 

28.80 

8 

X 

6 

tee 

21.00 

8 

X 

4 

tee 

15.70 

8 

X 

2 

tee 

8.00 

6 

X 

6 

tee 

18.90 

6 

X 

4 

tee 

13.60 

6 

X 

2 

tee 

8.00 

4 

X 

2 

tee 

8.00 

ESTIMATED  COST  OF  REPLACING  MUELLER  CONNEC- 
TIONS WITH  AN  EQUIVALENT  TAP  AND  STOP 

For  4-way,  allow  one  2"  tap,  @ $3.00  and  one  2"  stop  @ $5.00. . $8.00 


For  3-way,  allow  one  1J4"  tap  @ $2.50  and  one  V/z"  stop 

@ $3.00  5.50 

For  2-way,  allow,  one  V/\'  tap  @ $2.00,  and  one  1 14"  stop 

@ 1.50  3.50 


T-26 


Durham  Water  Company 


ACTUAL  COST  TO  WATER  COMPANY  OF  VARIOUS  APPUR- 
TENANCES TO  THE  DISTRIBUTION  SYSTEM  WITH 
ESTIMATED  COST  OF  SETTING 


Glamorgan  standard  valve  boxes $2.30 

Estimated  cost  of  setting 45 

Total $2.75 

Curb  Boxes  $ .60 

Estimated  cost  of  setting 12 

$ .72 

Stops : 

Vi”  1"  1J4"  2" 

$ .30  $ .80  $3.00  $5.00 

Lead  connections:  connection,  without  cock $2.00 

Estimated  cost  of  setting 1.50 


Total $3.50 

1"  connection,  without  cocks $3.00 

Estimated  cost  of  setting 1.50 

Total $4.50 

Corporation  cocks : Listed  separately  from  lead  connections : 

Z/A"  $ .50 

1"  83 


Durham  Water  Company 


T-2  7 


TOTAL  WEIGHT  OF  PIPE  IN  SYSTEM 


DISTRIBUTING 

SYSTEM 

AND  PIPING  AROUND 
STATION 

PUMPING 

Size,  in 

I^eng-th 

Weight  in  pounds 

Total  weight 

inches 

in  feet 

per  foot 

in  pounds 

4 

12,663 

21.7 

274,787 

6 

122,292 

33.3 

4,072,324 

8 

18,833 

47.5 

894,567 

10 

3,254 

63.8 

207,605 

12 

12,828 

82.1 

1,053.179 

14 

3,443 

102.5 

352,907 

16 

2,572 

125.0 

321,500 

18 

252 

150.0 

37,800 

20 

4,259 

175.0 

745,325 

180,396 

7,959,994 

Weight  of  specials  in  distribution  system 111,863  lbs. 

Add  for  Smith  connections  28,676 


140,539 

Per  cent  of  specials  1.77 

FORCE  AND  SUPPLY  MAINS 


Size  in  Length  Weight  Total  weight 

inches  in  feet  in  lbs.  per  foot  in  pounds 

12”  34,278  82.1  2,814,224 

20”  17,083  175.0  2,989,525 

Tootal 5,803,749 


Weight  of  specials  in  force  and  supply  mains 9,856  lbs. 

Add  for  Smith  connections  2,365  12,221 


Total  weight  of  pipe  in  system 13,916,503 

6,958  tons 


T-28 


Durham  Water  Company 


ACTUAL  PRICES  PAID  BY  THE  DURHAM  WATER  COM- 
PANY FOR  HYDRANTS 


Make 

Size 

and  type 

Cost  of 
hydrant 

Setting 

Total 

Glamorgan  

4" 

$24.75 

$3.50 

$28.25 

6" 

25.00 

3.50 

28.50 

Steamer 

27.25 

3.50 

30.75 

Sprinkler 

20.00 

3.50 

23.50 

Smith  

4" 

21.50 

3.50 

25.00 

6" 

23.50 

3.50 

27.00 

Steamer 

23.50 

3.50 

27.00 

Columbian  

4" 

23.00 

3.50 

26.50 

6" 

25.45 

3.50 

28.95 

Darling  

Steamer 

27.00 

3.50 

30.50 

Corey  

4" 

23.00 

3.50 

26.50 

Corey  

Steamer 

23.00 

3.50 

26.50 

Coffin  

4" 

23.00 

3.50 

26.50 

Matthews  

4" 

23.00 

3.50 

26.50 

Durham  Water  Company 


T-29 


ESTIMATED  COST  OF  REPRODUCTION  OF  METERS  AND 

SETTING 

Allowed 

for  Net 

Size  dis-  repro- 
of Coup-  counts  duction 


meter  Make  Meter 

54"  Lambert  $ 8.50 

1 " Lambert  16.50 

1 Yz"  Lambert  30.50 

2 " Lambert  51.00 

54"  Gamon  7.25 

54"  Empire  10.00 

6 " Empire  Comp 408.65 

54"  Crown  12.00 

1 " Crown  30.00 

V/2"  Crown  50.00 

2 " Crown  65.00 

3 " Crown  123.40 

54”  Hersey  9.40 

54"  Worthington  7.25 

1 " Worthington  13.50 

54"  Neptune  8.00 


ling' 

Wiper 

Setting 

etc. 

in  place 

$ .40 

$ 3.00 

$ .65 

$ 11.25 

.80 

3.25 

1.55 

19.00 

3.50 

3.00 

31.00 

4.00 

5.00 

50.00 

.50 

3.00 

.75 

10.00 

.40 

.40 

3.00 

2.55 

11.25 

20.00 

428.65 

.40 

.40 

3.00 

1.20 

14.60 

.80 

.40 

3.25 

2.95 

31.50 

.40 

3.50 

4.90 

49.00 

.40 

4.00 

4.40 

65.00 

2.00 

.40 

7.00 

132.80 

.50 

3.00 

1.65 

11.25 

3.00 

.60 

8.65 

3.25 

1.35 

15.40 

.40 

.50 

3.00 

.65 

11.25 

T-30 


Durham  Water  Company 


TABLE  SHOWING  POPULATION  AND  EARNINGS 


Year 

Population 
of  City  of 
Durham 

Population 
of  Durham 
Township 

Estimated 
population  of 
district  served  by 
Durham  Water 
Company 

Total 
earnings 
per  capita 

Total 

earnings 

1890 

5,485 

10,420 

7,500 

$1.15 

$ 8,620 

1900 

6,679 

19,055 

10,000 

2.41 

24,145 

1910 

18,241 

27,606 

24,000 

2.52 

60,550 

1915 

31,000 

3.04 

94,496 

1920 

38,000* 

3.30* 

*125,000 

*Estimated. 


EARNINGS  AND  EXPENSES,  1900  TO  1915  INC. 


Gross 

earnings 

Operating 

expenses 

Net 

earnings 

1900 

$24,145 

$ 9,147 

$14,998 

1901 

28,697 

12,652 

16,045 

1902 

32,924 

10,277 

22,647 

1903 

36,942 

11,418 

25,524 

1904 

39,295 

13,673 

25,532 

1905 

42,530 

20,524 

22,006 

1906 

45,828 

17,951 

27,877 

1907 

50,568 

23,038 

27,530 

1908 

54,828 

23,369 

31,459 

1909 

55,177 

24,852 

30,325 

1910 

60,556 

27,825 

32,731 

1911 

63,439 

32,808 

30,631 

1912 

73,986 

34,339 

39,647 

1913 

80,501 

42,658 

37.843 

1914 

89,381 

49.333* 

40.048 

1915 

94,496 

45,649 

48,847 

* These  operating 
for  new  construction, 

expenses  are  revised 
extraordinary  legal 

to  exclude  charges  which  were  obviously 
services,  and  other  expenses,  which  were 

abnormal  for  this  year. 


Note: — The  operating  expenses,  except  those  for  1914,  are  those  carried  by 
the  company  and  include  some  amounts  which  should  properly  be  charged  to 
construction. 


Durham  Water  Company 


T-31 


MAINTAINABLE  NET  INCOME,  TOGETHER  WITH  ESTI- 
MATED COST  OF  OPERATION  AND  EARNINGS  FOR 
THE  NEXT  FIVE  YEARS 


Year 

1915 

1916 

1917 

1918 

1919 

1920 

Gross  earnings  ....! 

$94,175  $100,000  $106,250  $112,500  $119,000  $125,500 

Operating  expenses 

50,825 

55,500 

59,500 

63, 500 

67,750 

72,000 

Net  revenue  

43,350 

44,500 

46,750 

49,000 

51,250 

53,500 

Estimated  total  con- 
struction during 
the  year  

$60,000 

$30,000 

$10,000 

$10,000 

$10,000 

Total  additional  in- 
vestment   

60,000 

90,000 

100,000 

110,000 

120,000 

Interest  and  depre- 
ciation on  above 
additional  invest- 
ments 6l4%  .... 

3,900 

5,850 

6,500 

7,150 

7,800 

Net  income,  less  in- 
terest on  addi- 
tional investment 

40,600 

40,900 

42,500 

44,100 

45,700 

Average  net  earnings  for  five-year  period $ 42,760 

An  amount  sufficient  to  return  7%  on..... 611,000 


This  will  allow  6%  interest  to  be  paid  after  1%  has  been  set 
aside  for  depreciation. 


T-32 


Durham  Water  Company 


COMPUTATION  FOR  GOING  VALUE 


Earnings,  Present  Plant  : 

In  the  following  table,  under  Present  Plant,  in  the  second  column, 
is  given  the  estimated  rate  of  gross  revenue  of  the  present  plant 
during  the  next  five  years  if  it  should  continue  in  business.  The 
figures  have  been  obtained  by  a consideration  of  the  gross  earnings 
for  some  years  back. 

Expenses,  Present  Plant: 

The  third  column  under  the  same  heading  contains  a similar  esti- 
mate of  the  probable  rate  of  expense  of  the  present  plant.  In  making 
up  these  figures  due  weight  has  been  given  to  the  fact  that  on  the 
company’s  books  have  been  made  charges  against  expenses  which 
should  properly  have  been  made  to  construction,  and  also  to  the 
fact  that  until  1912  part  of  the  pumping  was  done  by  water  power. 

Earnings,  New  Plant: 

The  following  assumptions  have  been  made  as  to  the  earnings 
which  would  be  secured  by  the  new  plant.  Public  hydrant  rentals  will 
be  obtained  at  once  and  will  be  the  same  as  the  present  plant  at  all 
times.  It  is  assumed  that  the  remaining  business  will  be  secured  in  ac- 
cordance with  the  following  schedule : 

Percentage  of  estimated 
earnings  of  the  present 
plant,  exclusive  of 

At  the  end  of  hydrant  rentals 

Six  months  40% 

One  year  60% 

Two  years  80% 

Three  years  90% 

Four  years  97% 

Five  years  100% 


Durham  Water  Company 


T -33 


The  total  earnings  of  the  new  plant  will  be  the  sum  of  the  public 
hydrant  rentals  and  the  above  proportions  of  the  remaining  earnings. 

Operating  Expenses,  New  Plant: 

It  is  assumed  that  at  the  beginning  the  operating  expenses  of  the 
new  plant  will  be  75%  of  those  of  the  present  plant  during  the  same 
period  of  time.  The  remaining  25%  of  the  operating  expenses  is  as- 
sumed in  proportion  to  the  rate  at  which  the  business  develops ; that  is, 
that  is, 

40%  at  the  end  of  six  months 
60%  at  the  end  of  one  year 
and  so  on. 

Total  Going  Value  : 

On  the  above  assumptions  the  probable  profits  of  the  present 
plant,  and  of  a new  plant  for  the  next  five  years,  have  been  estimated. 
The  amount  each  year  by  which  the  profits  of  the  present  plant  would 
exceed  those  of  the  new  plant  have  been  determined,  and  the  sum 
of  these  amounts  reduced  to  present  worth  represents  the  Total 
Going  Vtalue. 

The  tables  are  as  follows : 


T-34 


Durham  Water  Company 


COMPUTATION  OF  GOING  VALUE 

COMPARISON  OF  EARNINGS  OF  NEW  AND  PRESENT 
PLANTS 


Present  Peant 


Time, 

Approximate  estimated 
rate  of  gross  revenue 

Approximate  estimated 
rate  of  expenses 

Approximate 
estimated  rate 
of  net 
earnings 

1916  Jan. 

1 

$ 97,000 

$53,500 

$43,500 

1916  July 

1 

100,000 

55,500 

44,500 

1917  Jan. 

1 

103,000 

57,500 

45,500 

1918  Jan. 

1 

109,300 

61,500 

47,800 

1919  Jan. 

1 

115,800 

65,500 

50,300 

1920  Jan. 

1 

122,200 

69,750 

52,450 

1921  Jan. 

1 

128,800 

73,750 

55,050 

New  Plant 

Estimated  rate  of 
gross  earnings 

Estimated  rate  of  present 

of  public  hydrant  plant  less  hy- 
Time,  rentals  drant  rental 

Approximate 
Estimated  estimated 

earnings,  rate  of 

exclusive  of  gross  revenue, 
hydrant  rentals  new  plant 

1916  Jan. 

1 

$10,650  $ 86,350 

@ 

0% 

$ 10,650 

1916  July 

1 

10,850  89,150 

© 

40%  $ 35,650 

46,500 

1917  Jan. 

1 

11,050  91,950 

© 

60%  55,150 

66,200 

1918  Jan. 

1 

11,450  97,850 

© 

80%  78,300 

* 89,750 

1919  Jan. 

1 

11,850  103,950 

© 

90%  93,550 

105,400 

1920  Jan. 

1 

12,250  109,950 

© 

97%  106,650 

118,900 

1921  Jan. 

1 

12,650  116,150 

@ 100%  116,150 

128,800 

Durham  Water  Company 


T-35 


ESTIMATED  RATE  OF  EXPENSES  FOR  NEW  PLANT 


75% 

expense 
rate  of 
present 

25% 

expense 
rate  of 
present 

Time 

plant 

plant 

1916  Jan.  1 

$40,100 

$13,400 

@ 

1916  July  1 

41,600 

13,900 

@ 

1917  Jan.  1 

43,100 

14,400 

@ 

1918  Jan.  1 

46,100 

15,400 

@ 

1919  Jan.  1 

49,100 

16,400 

@ 

1920  Jan.  1 

52,300 

17,450 

@ 

1921  Jan.  1 
* Deficit. 

55,300 

18,450 

@ 

Portion  of  the 

Estimated 
total 
rate  of 

Estimated 
rate 
of  net 

25%  assumed 

expense 

earnings 

to  be  required 

for  new 

new 

for  new  plant 

plant 

plant 

0% 

$40,100 

—$29,450* 

40%  $ 5,550 

47,150 

—650* 

60%  8,650 

51,750 

14,450 

80% 

58,400 

31,350 

90%  14,750 

63,850 

41,550 

97%  16,950 

69,250 

49,650 

100%  18,450 

73,750 

55,050 

EXCESS  OF  NET  EARNINGS  OF  PRESENT  PLANT  OVER 
THOSE  OF  NEW  PLANT 


Time 

Rate  of 
excess 

During 

Average 

rate 

Total 

amount 

Discount 
factor  at  6% 

Present 

worth 

1916 

Jan. 

1 

$72,950 

1916* 

$59,050 

$29,525 

0.9855 

$29,100 

1916 

July 

1 

45,150 

1916t 

38,100 

19,050 

0.9573 

18,225 

1917 

Jan. 

1 

31,050 

1917 

23,750 

23,750 

0.9163 

21,750 

1918 

Jan. 

1 

16,450 

1918 

12,600 

12,600 

0.8645 

10,900 

1919 

Jan. 

1 

8,750 

1919 

5,775 

5,775 

0.8155 

4,700 

1920 

Jan. 

1 

2,800 

1920 

1,400 

1,400 

0.7694 

1,075 

Going  Value  $85,750 


*Firsthalf  of  year. 
tSecond  half  of  year. 


T-36 


Durham  Water  Company 


TABLE  SHOWING  RATE  AT  WHICH  BUSINESS  WAS  AC- 
QUIRED IN  NEW  ORLEANS,  TOGETHER  WITH  RATE 
AT  WHICH  IT  IS  ASSUMED  IT  WOULD  BE 
ACQUIRED  IN  DURHAM 


IEW  ORLEANS 

* 

Per  ct.  of 

Per  ct.  of 

premises 

total 

connected 

revenue 

Number  of 

to 

exclusive 

services 

Approximate 

total 

of  hydrant 

connected 

number 

number  of 

rentals 

at  end 

of  premises 

premises 

assumed 

of  year 

connected 

in  city  for  Durham 

At  start  

: 2,000 

2,000 

2.5 

40 

First  year  

12,700 

15,800 

20.5 

60 

Second  year  

22,600 

26,000 

33.5 

80 

Third  year  

29,068 

36,000 

46.5 

90 

Fourth  year  

33,959 

46,000 

59.0 

97 

Fifth  year  

40,883 

55,000 

70.5 

100 

Sixth  year  

47,653* 

64,000 

82.0 

*Total  number  of  premises  in  city,  78,000 


Durham  Water  Company 


T -37 


ESTIMATED  VALUE  OF  THE  FRANCHISE,  ON  THE  BASIS 
THAT  $579,000  IS  THE  VALUE  OF  THE  PLANT,  EX- 
CLUSIVE OF  THE  FRANCHISE  VALUE 

Assume  value  of  plant  January  1,  1916 $579,000 

Assume  that  $60,000  construction  work  is  done 

during  the  first  year : Add  one-half  of  $60,000. . 30,000 


Average  value  of  plant  during  1916 $609,000 

Estimated  net  income  during  first  year $44,500 

Interest  and  depreciation  charge,  6j4%  of  $609,000  39,585 


Profit  during  first  year $ 4,915 

Remainder  of  Construction  first  year $ 30,000 


Plant  value  at  end  of  1916 $639,000 

Assume  $30,000  construction  during  second  year, 

and  add  one-half  of  this $15,000 


Average  plant  value  during  1917 $654,000 

Estimated  income  during  second  year  $46,750 

Interest  and  depreciation  charge,  6 % of  $654,000  42,510 


Profit  during  second  year  $ 4,240 

Remainder  of  Construction  second  year  $ 15,000 


Total  value  at  end  of  1917 $669,000 

Assume  $2,500  construction  in  first  three  months 

1918,  and  add  one-half  of  this $ 1,250 


Average  value,  first  three  months  of  1918 $670,250 

Estimated  income,  first  three  months  of  1918....  $12,000 

Interest  and  depreciation  at  6j4%  per  year  on 

$670,250  10,892 


Profit  during  first  three  months  of  1918 $ 1,108 


T-38 


Durham  Water  Company 


SUMMARY 


Net 

Discount 

factor 

Present 

Year 

profits 

to  6 % 

worth 

1916  

$4,915 

0.9713 

$4,744 

1917  

4,240 

0.9163 

3,885 

979 

First  three  month  of  1918 

1,108 

0.8836 

Total  present  worth  of  profits, 

or  franchise  value.. 

$9,638 

RELATION  EXISTING  BETWEEN  “FRANCHISE  VALUE” 
AND  THE  TOTAL  VALUE  OF  THE  PLANT,  EX- 
CLUDING “FRANCHISE  VALUE” 

If  the  total  value  of  the  plant  were  reduced,  the  interest  charges 
in  the  above  table  would  be  reduced  by  6^4%  of  this  reduction,  and 
the  profits  increased  accordingly.  Therefore  the  relation  between  the 
“Franchise  Value”  and  the  Total  Value  is  as  follows: 


INCREASE  IN  FRANCHISE  VALUE  IN  PER  CENT  OF  DE- 
CREASE OF  TOTAL  VALUE,  EXCLUSIVE 
OF  FRANCHISE 

First  year  6 Discount  factor,  0.9713  6.313% 

Second  year  614%  Discount  factor,  0.9163  5.956% 

First  three  months,  % of  614%  Discount  factor,  0.8836  1.436% 

Total '. 13.705% 

This  means  that  if  the  total  value  were  reduced  say  $100,000  that 
the  franchise  value  will  be  greater  than  above  given  by  13.705%  of 
$100,000,  or  $13,705. 


Durham  Water  Company 


T-39 


ESTIMATED  COST  OF  REPRODUCTION  LESS  DEPRECIA- 
TION OF  THAT  PORTION  OF  THE  COMPANY’S  PLANT 
WHICH  WOULD  BE  USED  AT  ONCE  IF  THE  FLAT 
RIVER  SUPPLY  WERE  CONNECTED  TO 
PRESENT  SYSTEM 


Distribution  Reservoir  on  Huckleberry  Hill $ 15,900 

Supply  mains  from  reservoir  to  city 73,175 

Distribution  System  206,690 


Sum $295,765 

Engineering  and  contingencies  @ \2l/2% 36,971 


$332,736 

Interest  at  6%  19,964 


$352,700 

Land  and  easements  necessary  for  above  structures  $2,500 
5%  overhead  125 


$2,625 

12%  interest  315  $ 2,940 


$355,640 

Going  Value  85,750 

Franchise  Value  9,638 


$451,028 

Inventory  of  material  and  supplies  on  hand 

(from  company’s  inventory)  13,986 


Total $465,614 


A further  portion  of  the  company’s  plant  could  be  made  of  use 
to  the  city  by  removing  it  from  its  present  location  and  setting  it 
up  at  the  city’s  plant.  The  following  estimate  is  on  the  basis  of  the 
cost  of  reproduction  less  depreciation  less  a further  amount  for  re- 


moving and  transporting  to  the  new  site. 

Items  at  Eno  River  plant,  chiefly  pumps  and  boilers $ 18,169 

12"  force  mains  from  river  to  reservoir 10,415 


Adding  these  to  the  above  sum= $493,598 

The  remaining  portion  of  the  compnay’s  plant  not  included 
in  above  schedule  would  have  a value  as  scrap  or  for 
other  purposes  than  water  supply  estimated  to  be 10,325 


Total $503,923 


Memoranda  Regarding  Professional  Work 
Done  by  Hazen,  Whipple  Fuller 
During  the  Last  Twenty 
Years 


Hazen,  Whipple  & Fuller  were  unknown  personally  to  anyone 
connected  with  the  Durham  Water  Company.  They  were  engaged 
because  of  their  high  standing  and  experience  and  because  they  had 
enjoyed  the  confidence  of  the  City  of  Durham  and  had  been  employed 
by  it.  Asked  for  a statement  of  work  done  by  the  firm,  they  submitted 
the  following  memorandum.  The  bulk  of  these  items  covers  work 
done  by  municipalities. 

ADVICE  REGARDING  WATER  SUPPLIES,  INCLUDING  RE- 
PORTS AND  RECOMMENDATIONS  FOR  IMPROVE- 
MENTS AND  INCREASE  IN  SUPPLIES.  RECOM- 
MENDATIONS AS  TO  FILTRATION,  PLANS 
AND  SPECIFICATIONS,  SUPERVISION 
OF  CONSTRUCTION  OF  WORK  AND 
OPERATION  OF  PLANTS 


Albany,  N.  Y. 

East  Orange,  N.  J. 

Auburn,  N.  Y. 

Grand  Hotel,  N.  Y. 

Augusta,  Me. 

Grand  Rapids,  Mich. 

Austin,  Tex. 

Greenfield,  Mass. 

Baltimore,  Md. 

Guelph,  Ont. 

Bangor,  Me. 

Gilbertsville,  N.  Y. 

Battle  Creek,  Mich. 

Hackensack  Water  Co. 

Bethlehem,  Pa. 

Hartford,  Conn. 

Boston,  Mass. 

Holyoke,  Mass. 

Brandon,  Man. 

Hudson  River  Hospital 

Brisbane,  Queensland 

Hudson,  N.  Y. 

Burlington,  N.  J. 

Indianapolis,  Water  Co. 

Burlington,  Vt. 

Jersey  City,  N.  J. 

Charleston,  S.  C. 

Johnson  & Johnson  Mfg.  Co. 

Chester,  Pa. 

Kingston,  N.  Y. 

Cleveland,  Ohio 

Lake  Placid 

Columbia,  S.  C. 

Lancaster,  Pa. 

Columbus,  Ohio 

Lawrence,  Mass. 

Concord,  N.  H. 

Lima,  Ohio 

Elyria,  Ohio,  Water  Co. 

Lincoln,  Mass. 

Lorain,  Ohio 
Lynn,  Mass. 

Menominee  Water  Co. 

Miami  Water  Co. 

Minneapolis 
Montclair  Water  Co. 

New  Brunswick,  N.  J. 

Newburgh,  N.  Y. 

New  Jersey  Zinc  Co. 

New  York  City 
Norfolk,  Va. 

Northampton,  Mass. 

Nyack,  N.  Y. 

Oswego,  N-  Y. 

Ottawa,  Ont. 

Painesville,  Ohio 

Palmer  Water  Co.,  Palmerton,  Pa. 
Peoples  Water  Co.,  Oakland,  Cal. 
Peterboro,  N.  H. 

Philadelphia,  Pa. 

Piqua,  Ohio 
Pittsburgh,  Pa. 

Plainfield  Water  Co. 

Portland,  Me. 

Poughkeepsie,  N.  Y. 

Providence,  R.  I. 

Reading,  Pa. 


Rockefeller  Estate,  Tarrytown 
Rutland,  Vt. 

Saginaw,  Mich. 

St.  Albans,  Vt. 

St.  Johns,  N.  F. 

St.  Louis,  Mo. 

St.  Thomas,  Ont. 

Salem  & Beverly,  Mass. 
Salisbury,  Md. 

Salisbury,  N.  C. 

San  Francisco,  Cal. 

Saranac  Lake,  N.  Y. 

Saratoga  Springs 
Springfield,  Mass. 

Toledo,  Ohio 
Trenton,  N.  J. 

Tuxedo  Park,  N.  Y. 

Vassar  College 
Vergennes,  Vt. 

Wallingford,  Conn. 
Washington,  D.  C. 

Watertown,  N.  Y. 

Waterville,  Me. 

West  Point  Military  Academy 
Wilmington,  Dela. 

Winnipeg,  Man. 

Yonkers,  N.  Y. 


GENERAL  ADVICE  REGARDING  SEWERS  AND  SEWAGE 
DISPOSAL 


Altoona,  Pa. 

Bay  Head,  N.  J. 

Cincinnati,  Ohio 
Cleveland  (State  Board  of 
Englewood,  N.  J. 

Guelph,  Ont. 

Hudson  River  Hospital 
Louisville,  Ky. 

Millbury,  Mass. 

Milwaukee,  Wis. 


Northampton,  Mass. 

Passaic  Valley  Sewerage  Com. 
Paterson,  N.  J. 

Health)  Penna.  State  Lunatic  Hospital 
Pittsburgh,  Pa. 

Poughkeepsie,  N.  Y. 

Rochester  (State  Board  of  Health) 
Vassar  College 
Westbrook,  Me. 

Willsboro,  N.  Y. 


FILTRATION  PLANTS  DESIGNED 


Albany,  N.  Y.,  covered  sand  filters. 

Auburn,  N.  Y.,  not  yet  built. 

Brisbane,  Queensland  (building). 

Hartford,  Conn.,  covered  sand  filters,  not  built. 

Hudson  River  Hospital,  covered  sand  filters. 

Ithaca,  N.  Y.,  mechanical  filters. 

Ogdensburg,  N.  Y.,  covered  sand  filters. 

Ottawa,  Ont.,  mechanical  filters,  two  plants  on  different  locations, 
not  yet  built. 

Peekskill,  N.  Y.,  covered  sand  filters. 

Pennsylvania  State  Lunatic  Hospital,  Harrisburg,  open  sand  filters. 

Red  Bank,  N.  J.,  open  sand  filters. 

Springfield,  Ludlow  supply,  intermittent  filters ; Little  River  supply, 
covered  sand  filters.  These  filters  were  included  as  part  of  an  en- 
tirely new  source  of  supply,  consisting  of  dams,  pipe  lines  and  other 
structures. 

Superior,  Wis.,  covered  sand  filters. 

Toronto,  Ont.,  covered  sand  filters. 

Washington,  D.  C.,  covered  sand  filters. 

Watertown,  N.  Y.,  mechanical  filters. 

Yonkers,  N.  Y.,  open  sand  filters  and  two  separate  additions  of 
covered  sand  filters. 


VALUATION  CASES 

Athol,  Mass.,  value  of  plant  for  the  town. 

Augusta,  Maine,  for  the  city. 

Cortland  Water  Co.,  for  the  company.  (Plant  sold  to  city  without 
litigation). 

Denver  Union  Water  Company;  member  of  board  of  five  engineers; 
two  selected  by  city  and  two  by  company;  Mr.  Hazen  acted  jointly  for 
company  and  city. 

Des  Moines  Water  Company,  for  the  company. 

Gardner  Water  Company,  for  the  company. 

Gloucester,  Mass.,  for  the  city. 

Ithaca  Water  Works  Company,  for  the  company. 

Newburyport,  Mass.,  for  the  city,  value  of  filters,  etc. 

Racine  Water  Company,  for  the  company. 

Spring  Valley  Water  Co.,  (supply  for  San  Francisco,  Cal.),  for 
the  company;  now  in  progress. 

Staten  Island  Companies,  for  the  City  of  New  York. 

Waterly  Water  Company,  for  the  company. 

Wildwood  Water  Works  Co.,  for  the  company. 

Wilmington,  Clarendon  Water  Co.,  value  of  plant,  agreeing  on 
value  with  city’s  representative. 


3 


Portland,  Me.,  value  of  physical  property  for  the  city. 

Hackensack  Water  Co.,  (supply  for  some  300,000  people  in  New 
Jersey),  for  the  Bergen  County  Freeholders. 


ASSISTANCE  IN  LITIGATION 

Butler  Water  Company,  infringement  suits. 
Bangor,  Maine. 

Gloversville,  N.  Y.,  sewerage. 

Millbury,  Mass.,  sewerage. 

State  of  Missouri  vs.  Chicago  Drainage  Canal. 
Denver  Union  Water  Co. 


MISCELLANEOUS  WORK 

Charles  River  Dam,  advice  to  parties  regarding  construction  work 
on  the  river. 

Florida  Everglades ; drainage  of  certain  lands. 

Isthmian  Canal,  member  of  board  of  engineers,  1909,  reporting  on 
Gatun  dam  and  general  condition  of  work  at  the  Isthmus. 

The  above  is  not  a complete  list.  Smaller  places  and  certain  other 
work  not  included. 


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